Crypto Exchange OKX Has A Plan to Assuage Traders’ Fears: Transparency
The company’s latest tools reflect a growing industry-wide push to strengthen transparency following FTX’s marked lack thereof
Spot cryptocurrency and derivatives exchange OKX is bolstering its efforts around transparency in a bid to reinforce trust from existing customers — and in a play to win over potential new traders — following the crash of rival FTX, which took the opposite approach.
The Seychelles company has rolled out a proof-of-reserves page on its website that shows its latest collateralization ratios, as well as a self-audit tool intended to verify assets are backed on a one-to-one basis, known as proof of reserves.
The concept, designed to act as a safeguard for client funds that becomes even more relevant in the event of another pronounced downturn and ensuing spate of withdrawals, is gaining traction. FTX’s auditor and Binance have both pushed for the setup to become an industry standard.
OKX, meanwhile, is rolling out what it calls an independent custodial wallet designed to enable institutional clients to secure their assets separately from its reserves.
The wallet, set to launch in coming weeks, is designed as a real-time tracker for wallet balances and safeguard the private keys of customers in a custodial model.
Ripple effects have continued, largely unabated, following the liquidity crunch that essentially forced FTX to declare bankruptcy. Lawyers for FTX and its affiliates said in a motion that as many as one million creditors could be affected.
Lennix Lai, OKX’s financial markets director, told Blockworks that while the crypto exchange had no direct exposure to FTX, customers are reeling and want to know what firms — especially exchanges and custodians — are doing about their unease.
“That’s why we’re in the process of a third-party audit to publish our Merkle Tree proof-of-reserves, and we’ve shared 23 of our BTC addresses and 13 ERC20 addresses publicly to verify a portion of our reserves,” he said.
Added Lai: “Our new proof of reserves [and self-audit features] give users the ability to self-verify that their assets are 100% backed. But the third-party audit will provide additional reassurance.”
“As this crisis has made apparent, centralized intermediaries of financial transactions are opaque and often untrustworthy,” executives at crypto-focused asset managerPantera Capital wrote in a Nov. 11 letter to clients.. “Nothing could have made more obvious the need for decentralized, trustless protocols that allow users to trade, hold, and transfer their assets without relying on entities like FTX, Celsius or Voyager.”
Crypto storage wallet Arculus said it has seen a sales boost amid the recent heightened volatility, but declined to comment on specific sales. And digital assets access provider Wellfield Capital said last week it expects its revenue to rise, as the market shifts away from centralized exchanges — toward decentralized services and self-custody.
“Going forward, OKX will continue to do whatever we can to demonstrate our solvency and stability, while continuing to safeguard our users’ data,” Lai said.
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