As anxiety gripped markets amid FTX’s liquidity issue, cryptocurrency exchange BitMEX was among the first to provide an updated proof-of-reserves of their crypto holdings.
Crypto exchanges are suddenly rushing to make their fund reserves public. On Wednesday alone, Binance, Gate.io, KuCoin, Poloniex, Bitget, Huobi, OKX, Deribit, and Bybit published separate statements stating that they would reveal their Merkle tree reserve certificates to promote transparency.
Publishing proofs can take up to a month, but OKX director of financial markets Lennix Lai told CoinDesk in a Telegram chat that the analysis is done by an independent third party, which accounts for the length of time.
While other exchanges stated that they would publish findings using Merkle tree processing, BitMEX chose a simpler method: “All BitMEX has done here is post a basic list of the reserves.” “The list contains all of the Bitcoin we hold under custody on behalf of our clients; it’s that easy,” the exchange said in a post on Wednesday. (A list of BitMEX’s assets holding may be seen here.)
The list includes the execution scripts for each user transaction under custody, as well as BitMEX public keys. “This consequently demonstrates that the corporation is able to access all monies, presuming the company has access to the private keys associated with the public keys,” BitMEX added.
On November 8, BitMEX had a reserve bitcoin balance of 75,742.4 BTC versus liabilities of 75,617.1 BTC, indicating that it has assets in excess of what it owes customers.
The proof-of-reserves came before the initial listing of BMEX tokens, BitMEX’s native token, on Friday. According to CoinDesk, the exchange launched the token in 2021 before airdropping BMEX to users based on their activities.
The tokens were meant to be available for trading in July, but that plan was scrapped due to “market conditions.”
For some crypto market experts, BitMEX’s move to abandon derivative trading was a strategy for the exchange to stay relevant.
“Before newer exchanges appeared and acquired prominence after 2017, BitMEX ‘degens’ and the ‘trollbox’ were stalwarts of the Wild West world of crypto trading,” Tim Behrsin, founder of crypto project Grexie, stated in a Telegram discussion.
BitMEX releasing tokens is how the exchange stays relevant among new crypto traders who are spoiled for choice by competitor exchanges that offer interest-accruing exchange tokens and discounts based on tokens owned.
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