On Friday Dec 09, the Singapore-based exchange Crypto.com had its Proof of Reserves verified by the renowned Mazars Group. Crypto.com said that their auditor had to use sophisticated cryptographic processes to verify the existence and backing of client funds. The exchange also announced that its customers may now see the complete 1:1 backing of their cryptocurrency holdings. The company specializing in digital assets said that Mazars Group had compared the digital assets the company had verified to exist at on-chain addresses to the funds its customers had on deposit with the company.
https://t.co/vCNztABJoG releases Proof of Reserves audited results.
— Crypto.com (@cryptocom) December 9, 2022
Mazars Group compared the assets held in on-chain addresses proven to be controlled by https://t.co/vCNztABJoG with customer balances through an auditor-overseen live query of a production database as of Dec 7. pic.twitter.com/sXgvIe4ZMV
Providing audited Proof of Reserves is an important step for the entire industry to increase transparency and begin the process of restoring trust. Crypto.com is fully committed to providing customers around the world a safe, secure, and compliant means of engaging with digital currencies.
Kris Marszalek, CEO of Crypto.com
On Wednesday, Binance, another cryptocurrency exchange, produced a similar report from the same auditor, purportedly establishing its reserves. On the same day that Binance matched user balances to assets kept in on-chain addresses, Mazars did the same thing for Crypto.com.
Nonetheless, this is not an official auditing report, but a matching exercise based on information provided by the client about on-chain addresses of assets and a client database of customer balances. It is no better than the Binance report, which is not surprising since it is the same firm and partner doing it.
According to Professor Francine McKenna of the University of Pennsylvania’s Wharton School of Business
Since not all customers will believe the exchange when it says it has no debts or is solvent, Crypto.com’s proof-of-reserves website gives those customers an opportunity to independently verify the exchange’s claims. By logging into the app, users may double-check the amounts of assets they had at the time of the audit and save the resulting Merkle hash. After obtaining their Merkle hash, customers may verify their obligations are included in the exchange’s audited Merkle tree by visiting a separate auditor website managed by Mazars.
It is now easy for our existing users to verify that Crypto.com has a 1:1 reserve of all customer crypto assets deposited on its platform, and users can confirm the assets in their account are responsibly backed and accessible, both for the Crypto.com App and Crypto.com Exchange.
Crypto.com said Friday
Mazar asserts that the Silver Sixpence Merkle Tree Generator is used on its auditor page. Therefore, any developer should be able to figure out whether the auditor page was tampered with in any manner to provide fraudulent results by running the application in their own development environment.
