Shortly after the FTX debacle began, Bybit the Dubai-based exchange published its reserve wallet addresses, and it has now developed a verification method for consumers to follow its holdings.
Bybit, a cryptocurrency exchange, has joined the chorus of exchanges calling for greater transparency in the aftermath of the FTX disaster.
It announced the deployment of a Merkle Tree-based proof-of-reserve mechanism on December 12. The new transparency project enables users to easily check Bybit’s holdings as well as their own funds put in the exchange.
The option is available to all customers who have funds in trading and financing accounts, as well as crypto holdings in Bybit Earn products.
Furthermore, the new functionality allows for the verification of Bybit’s wallet ownership, as assets are stored in a 1:1 ratio.
Bybit co-founder and CEO Ben Zhou commented on the use of Merkle Trees in liquidity verification:
“The cryptographic solution brings forth a crypto-native, trustless model of providing verifiable evidence of our on-chain holdings and liabilities…”
The exchange is also improving withdrawals and tightening risk management rules, according to the release. It also promised to share all of the information in its Bitcoin BTC and Ether wallets.
It previously revealed its reserve wallet addresses on November 16, the week after the FTX controversy broke.
Many of the industry’s top firms have adopted similar transparency methods as users shift their focus to keeping their cash secure and exchanges responsible.
Binance was the first to make its reserves available to the public and commit to a Merkle Tree-based system, which it then published two weeks later.
However, after releasing some of its otherwise secret data, red flags in the exchange’s finances such as its corporate structure, BTC liabilities, and internal control quality were revealed.
Huobi and Gate.io, two other exchanges, were also scrutinized after publishing images of their reserves using lent monies. Grayscale, on the other hand, claims it is unwilling to divulge anything owing to security concerns.
Jesse Powell, Kraken’s co-founder, and CEO issued a statement stating that all of these proof of reserve efforts are meaningless without the aggregate of customer liabilities.