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Proof of Reserves means nothing without liability. You can have reserves of 100 billion but your liability is 200 billion.
by senttoschool 4y ago
Proof of Reserves means nothing without liability. You can have reserves of 100 billion but your liability is 200 billion.
- codetrotter 4y ago> Proof of Reserves means nothing without liability Kraken knows this. > Kraken voluntarily conducted the industry’s first Proof of Reserves audit and set a legitimate standard by accounting for not only our crypto balances, but also our client liabilities under the supervision of an independent auditor. https://blog.kraken.com/post/16592/proof-of-reserves-or-proof-of-nothing-there-is-no-in-between/ https://blog.kraken.com/post/16592/proof-of-reserves-or-proo...
- senttoschool 4y agoSo where is Kraken's liabilities audit from a reputable firm? Please no no-name firms.
- deleted 4y ago[deleted]
- landoftheice 4y ago[dead]
- DannyBee 4y agoI'm definitely in the "crypto is silly and a drag on the world" camp, but this is actually not a reasonable request. The big 4 accounting firms have all stated they won't take on more crypto audits. So have like the next 20 :) That is true whether you're trying to do it right or not (IE It is independent of whether you are in the 0.1% of this stuff that is not a scam). It's not reasonable to ask them to do something impossible, and then point out that they can't do it as proof of fraud. That's true even if it's impossible because of worries about fraud :) It's instead reasonable to ask them to do what they can. IE "Prove you aren't fraudulent by getting the big 4 to audit your liabilities" - "The big 4 won't take on more crypto audits due to worry about fraudulent companies and their own reputation" - "See, you are fraudulent!" Does not work as an argument.
- kortilla 4y agoThey’ve only stated that because it’s not obvious there are any big legit crypto companies. If kraken looked fully above board, the big 4 accounting companies would be willing to take it on as a client.
- karamanolev 4y agoI don't like crypto and I don't fully buy the Kraken audits, but man, are the Big 4 also full of s**. I wouldn't say any legit (if such exists) crypto firm can do anything to be taken on as a client at this point.
- TheOtherHobbes 4y agoWhich is ironic because the Big 4 are not known for aggressive auditing. There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality.
- WrtCdEvrydy 4y ago> There have been plenty of cases in trad-fi where a positive audit was followed by collapse, and sometimes evidence of criminality. I mean, audits should trigger a collapse... I assume once people inside realize the audit passed, they'll be more blatant and likely to blow up their scheme.
- DannyBee 4y agoSure but it changes nothing, as I said. Assume 99.9% of companies are fraudulent and that’s why they won’t do audits. You can’t say the 0.1% are fraudulent because they can’t get them to break their policy. You can only ask them to do what they can do.
- prepend 4y agoDeloitte audits coinbase [0] and e&y audits at least one crypto company. So they haven’t sworn off crypto as an entire industry, they just won’t audit shady firms. And specifically binance has not been able to convince a major firm to audit them. Also, it’s not that these crypto companies aren’t hiring big4, it’s that big4 won’t attest to reserves and other accounting standards. So it’s quite likely that crypto companies are attempting to hire, big4 do due diligence, detect shenanigans and refuse. [0] https://blockworks.co/news/crypto-auditors-call-it-quits https://blockworks.co/news/crypto-auditors-call-it-quits
- seviu 4y agoReputable firms will not touch anything related to crypto. They are not allowed to.
- mhluongo 4y agoThey are and they have. Many stopped after FTX as a policy. Poor risk/reward tradeoffs.
- sobkas 4y ago> So where is Kraken's liabilities audit from a reputable firm? Please no no-name firms. There is no such thing as reputable audit firm. They will do whatever audited firm wants because they want to get paid for more audits.
- senttoschool 4y agoSure, if the firm is willing to put their entire reputation on the line to get more of your business. KPMG, PwC, Deloitte, and E&Y are very unlikely to destroy their reputation for your little business.
- karpierz 4y ago> Kraken knows this. Clearly, because they won't attest to liabilities (IE, how much money do they owe in total), but "client liabilities" (IE, how much money do they owe to their customers). If they took out a loan for 100M, with their client's assets as collateral, that won't be covered by "client liabilities", but it sure as hell will be a problem when that loan gets called in.
- b3lvedere 4y agoLooks to me that is not so different from 'normal' banks
- polygamous_bat 4y agoExcept "normal" banks are regulated with a history of regulation going back for more than a century.
- zorked 4y agoAnd as we know this system has been working perfectly.
- matheusmoreira 4y agoRegulate crypto exchanges then. They're just banks in disguise.