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After CoinSwitch, CoinDCX publishes its proof of reserves

After CoinSwitch, CoinDCX publishes its proof of reserves
Photo Credit: 123RF.com
24 Nov, 2022
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Homegrown crypto exchange CoinDCX became the latest web3 venture in the country to publish its proof of reserves, in a bid to convince its users that their investments are not at risk. The exchange’s reserves have been published on Singapore-based blockchain analytics platform Nansen, reporting $129.7 million worth of total assets as of Thursday, November 24.

The proof of reserves can be accessed here.

The move comes one week after fellow homegrown crypto exchange, CoinSwitch, said on November 17 that it has conducted an independent third-party audit of its financial reserves. A statement by the firm based on the audit claimed that CoinSwitch possessed higher crypto and INR reserves than the sum total of its investor holdings.

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Sumit Gupta, cofounder and chief executive of CoinDCX, said in a statement that the company is “also working on implementing cryptographic proof of liabilities in addition to certified audits of our financial health.”

Fellow homegrown crypto exchanges, such as Giottus, have also declared that they would be publishing their proof of reserves, amid the ongoing debacle.

However, industry experts have warned that only providing proof of reserves may not be an entirely failsafe way to guarantee the financial health of a company. On November 18, Gupta told Mint that exchanges offering proof of reserves without disclosing a company’s liabilities would offer the public “only half the picture”.

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CoinDCX’s disclosure on Nansen also includes a list of wallet addresses linked to the exchange, as well as the total debt of the firm.

The exchange’s move comes on the back of a tumultuous month for crypto exchanges globally, which saw FTX, one of the most popular global crypto exchanges, filed for bankruptcy — after details emerged about the firm, and its founder Sam Bankman-Fried, using investor money in other ventures not directly related to the exchange or its customers.

FTX’s crash saw widespread investor pullout from the global crypto market, pummelling an already fraught crypto industry. Bitcoin, the world’s most popular and most traded cryptocurrency token, dropped by over 26% to below $15,800 in the aftermath of the FTX crash.

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The wipeout has led to global crypto ventures, including Binance, to publish their proofs of reserves. Binance chief, Changpeng Zhao, also stated that the firm would set-up an “emergency liquidity fund” to support “legitimate” crypto ventures in need of immediate liquidity.

On Thursday, Bloomberg reported that Zhao has also earmarked a “possible” $1 billion towards the liquidity fund.