Kraken holds 100% of its crypto deposits

Kraken, one of the biggest and most respected crypto exchanges, has integrated Proof of Reserves to prove that it holds 100% of the crypto assets deposited. A PoR is an independent, third-party conducted audit, which aims to make sure that a custodian holds the assets it claims to on behalf of its clients.

How does Proof of Reserves work?

This auditor looks at all balances held and aggregates them into an anonymized data structure that encapsulates all client balances, called a Merkle tree. Everyone can verify that their balance was included in the Proof of Reserves audit by comparing the Merkle root to select pieces of data.

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

Even the smallest change made to the rest of the data will affect the root, so tampering will be identified immediately, the exchange said.

How to check your holdings on Kraken

The exchange proves ownership of addresses. Every user can sign in with a private key, then check their holdings. To do this, they must go to account settings (Settings > Account) in their Kraken account and choose the Audits tab.

This will show recent audits that verified the account balance, the date of the audit, the associated Audit ID, the name of the auditor, and the type of audit. The Audit ID is the string identifying the audit.

Finally, they choose the audit date they want to verify. This section has confirmation of the audit type and your Record ID, specific to the particular audit. It lets them confirm through the third-party auditor that their account balance was included.

Commitment to transparency

Kraken posted on their official site:

Our regular Proof of Reserves audits make it easy for clients to verify the balances they hold are backed by real assets, all with just a few easy clicks in their account. An advanced cryptographic accounting procedure conducted semi-annually by trusted auditors, Proof of Reserves lets you verify that Kraken is meeting rigorous standards for accountability and exceeding the transparency offered by legacy financial firms.

Kraken revives traditional security method

When Mt. Gox went bankrupt in 2014, most crypto exchanges started offering a similar feature. With time, it was abandoned. Kraken is reviving a traditional method of proof of holding all deposits.