After 45 days of testing, cryptocurrency exchange MEXC Global published its proof-of-reserves (PoR) snapshot on February 22.
In a document, MEXC claims its reserve ratios for Tether (USDT $1.00), USD Coin (USDC $1.00), Bitcoin (BTC $23,050), and Ether (ETH $1,591) were 120.70%, 240.18%, 116.50% and 110.53%, respectively, via the Merkle tree method.
MEXC owned 232.4 million USDT, 33 million USDC, 1,869 BTC, and 12,472 ETH in custodial user assets as of the snapshot date of February 10. The overall holdings for the four cryptocurrencies in MEXC wallets were as follows: 280.6 USDT, 79.4 million USDC, 2177.5 BTC, and 13,785.6 ETH. A MEXC spokesman stated:
“MEXC will provide monthly updates on users’ asset data through the Merkle tree. This proof considers strong proof that our users’ assets are available for 1:1 redemption at any time. As the industry becomes more regulated, we may disclose additional data that our users need.”
The representative stated that in addition to the current safeguards for user assets, the exchange also intends to create a “MEXC Investor Protection Fund.”
A list of the exchange’s wallet addresses was made public by MEXC prior to the launch. The representative responded that MEXC had secured money service company licenses in the US, Canada, Switzerland, and Estonia and that “clear regulatory standards are extremely vital for the entire industry.”
Exchanges have embraced the PoR technique as a measure of their financial health, but other professionals are not so sure. According to Jack Graves, a law expert who teaches at Syracuse University, PoRs do not provide other crucial facts including liabilities and leverage. He explained:
“You can audit how many assets a crypto exchange has on-chain, but how much of it is pledged as collateral? That’s a lot harder to figure out unless you have access to their financial services, books, and records,”
