Exchange Proof of Reserves — What to Check

Overview

After the FTX collapse, Proof of Reserves (PoR) became a critical trust metric for centralised crypto exchanges. PoR uses Merkle tree cryptography to demonstrate that an exchange holds assets at least equal to customer deposits, providing a verifiable solvency check. Major exchanges such as Binance and Kraken now publish regular PoR reports, though quality and methodology vary. Understanding how to verify these reports — and knowing their limitations — is essential for deciding where to keep your funds. For long-term holdings, cold storage remains the safest option regardless of an exchange's PoR status.

Key Takeaways

• Proof of Reserves (PoR) uses Merkle tree cryptography to prove an exchange holds assets equal to deposits.
• PoR should include proof of liabilities — assets alone don't prove solvency.
• Major exchanges (Binance, Kraken, OKX) publish PoR reports — check them regularly.
• Third-party auditors provide more reliable PoR than self-reported data.

Practical Tips

• Verify your own account is included in a PoR audit using the Merkle tree leaf verification tool.
• Prefer exchanges audited by established firms (Mazars, Armanino, Nansen).
• Don't hold more on an exchange than you need for active trading — self-custody the rest.