Crypto Exchange ‘Proof of Reserves’ Not Calming Investor Fears

Crypto.com and OKX saw massive investor outflows despite showing their reserves

article-image

Source: Shutterstock

share

Crypto exchanges are trying to prevent a liquidity crisis by proving there is no liquidity crisis. It doesn’t seem to be working.

After FTX went under, crypto exchanges Crypto.com and OKX created so-called “proof of reserves” dashboards showing evidence of their token reserves. By Monday, a combined $850 million disappeared from the dashboards as investors removed funds from the exchanges. 

Blockchain data platform Nansen has become the in-demand platform for proof of reserves, with Binance, Crypto.com and OKX all creating dashboards in the last few days.

Read more: What Is Proof of Reserves and Can It Build Back Trust?

Struggling to restore customer confidence

Crypto.com’s proof of reserves went live Friday, showing 20% of its reserves — representing customer assets — were held in the Shiba Inu (SHIB) meme token.

“We have no control over what you guys buy. You buy it, we will store it,” CEO Kris Marszalek said in a Monday livestream, adding: “Those are not our funds. Those are our client funds.”

The centralized exchange also faced questions Saturday over roughly $400 million worth of ether it claims to have accidentally sent to fellow exchange Gate.io in October. Marszalek characterized the transfer as an innocent mistake.

Loading Tweet..

All ether was subsequently returned, and Gate.io claimed the funds were not counted in that exchange’s own proof-of-reserves snapshot.

Nevertheless, it wasn’t the first time a mistake like this happened, and the Nansen dashboard shows more than $500 million flowed out of Crypto.com’s reserves over the weekend.

More transparency needed matching reserves and liabilities

The Seychelles-based OKX exchange — which faces an asset movement controversy similar to Crypto.com’s — launched its own Nansen dashboard Saturday, showing $6 billion in reserves. That figure had dropped below $5.8 billion on Monday.

Wary of being caught in the next FTX, investors seem to be snatching up liquidity where they can get it. Aaron Kaplan, CEO of digital asset platform Prometheum, thinks showing assets without context doesn’t really prove exchanges have healthy balance sheets.

“There’s no liquidity crisis if we have customer funds and assets. But what about the potential leverage?,” Kaplan said. 

It’s one thing for exchanges to claim they have enough assets on their balance sheet, as FTX did in its last days. It’s another thing, in a post-FTX world, to get investors to believe them. 

Both OKX and Crypto.com have pledged to undergo audits, which Thomas Perfumo, the head of strategy at Kraken, cited as one way reserves can be proved legit.

“I could tell you my liabilities are 5 or 20, but if I tell you that, you’re basically trusting me to make a true statement,” Perfumo told Blockworks, noting that an auditor can verify what a platform’s liabilities really are.

Kraken is audited semiannually by Armanino, a popular auditor that also does business with exchanges including Ledn, Nexo and Gate.io. There seems to be a general desire among good-faith actors in crypto to prove their reserves. But trust won’t be won back easily.

“You’re just not going to get [trust] in a day. That’s the reality,” Perfumo said.

OKX and Crypto.com did not immediately return requests for comment.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

The House on Thursday passed the CLARITY Act, a landmark cryptocurrency market structure bill

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro