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How does Kraken/proof of reserves ensure that in case of bankruptcy there are no creditors with higher privileges?

• xlbuttplug 4y ago
  That's a good point. The exchange's remaining liabilities outside user deposits are still an unknown. (Or at least can't be verified in a trustless manner.)
  • skinnymuch 4y ago
    Doesn’t that make it borderline worthless?
    • vkou 4y ago
      Correct. There is no on-chain way to prove that my exchange doesn't actually owe some third party a trillion dollars.
    • xlbuttplug 4y ago
      It does prove that the exchange is in possession of "liquid" assets matching user deposits, which I don't think is worthless, especially if the userbase is large. I agree that it's far from a comprehensive proof though. Perhaps exchanges need to stick to the bigger auditors for now.
    • lottin 4y ago
      Yes, but it's probably good enough to fool the average crypto investor.