Kraken CEO criticises Binance over Proof-of-Reserve release

Jesse Powell claimed that Binance’s PoR is pointless and there are no details about negative balance accounts.

Jesse Powell is the CEO & founder of Kraken crypto exchange. Kraken is a popular crypto exchange, which is the 3rd biggest crypto platform after Binance & Coinbase, in terms of 24 hours global crypto trade volume on its platform.

On 26 November, Jesse took to Twitter to share his opinion on Binance’s Proof-of-reserves, which ensures the holdings of the clients’ funds safely.

Kraken CEO said that it is pointless because there is no proof/surety by any auditor to ensure that all the provided details about the reserves are ok without any negative balances.

I'm sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.

The merkle tree is just hand wavey bullshit without an auditor to make sure you didn't include accounts with negative balances. The statement of assets is pointless without liabilities. https://t.co/b5KSr2XKLB

— Jesse Powell (@jespow) November 25, 2022

Jesse also said that reserves’ records in BTC are not a good thing and it is also not enough to provide hash addresses corresponding to all account IDs because it is not enough to explain everything.

“This is simply “here’s a hash of your record in the BTC spreadsheet”. ok… but what’s the point? The whole point of this is to understand whether an exchange has more crypto in its custody than it owes to clients. Putting a hash on a row ID is worthless without everything else.”

Further, Kraken’s CEO suggested all the journalists & news media take time to understand the whole thing instead of misleading the people.

People who oughta know better, journalists, especially, should take the time to understand this before overselling it and misleading consumers.https://t.co/Qzb5UY3Bdj

— Jesse Powell (@jespow) November 25, 2022

In the same Tweet thread, Kraken CEO also claimed that such efforts are changing the meaning of PoR, where some are redefining it & others are in confusion.

Binance CEO Changpeng Zhao responded to all of these questions from Kraken CEO and confirmed that a third-party auditor was engaged & he already talked about this thing several times

To address questions posed by Jesse P,

In the report , "Upcoming Plans: Involve third-party auditors to audit PoR results", for this PoR result.

I said multiple times publicly, the bottleneck was the auditors has a few weeks wait. We move forward in incremental steps. 1/2 https://t.co/BTNa2rl3XB

— CZ Binance (@cz_binance) November 26, 2022

Zhao also said that no negative balances were added and also welcomed the new questions regarding this matter to improve in case anything happened wrong.

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