The cryptocurrency exchange Bybit joins the parade of exchanges in the industry pushing for transparency post the FTX catastrophe.
On December 12, it announced the launch of a Merkle Tree-based proof–of-reserve program. The new transparency initiative allows its users to directly verify Bybit’s holdings, along with their personal assets deposited into the exchange.
This feature is available for all users with funds in either trading or funding accounts. It also includes crypto holdings from Bybit Earn products.
Additionally, the new feature enables verification of Bybit’s wallet ownership, that assets are held with a 1:1 ratio.
Ben Zhou (co-founder and CEO) of Bybit commented on the use of Merkle Trees to verify liquidity.
“The cryptographic solution brings forth a crypto-native, trustless model of providing verifiable evidence of our on-chain holdings and liabilities…”
The exchange will also increase withdrawals and improve its risk management control, according to the announcement. It also committed to publishing all of the content of its Bitcoin (BTC) and Ether (ETH) wallets.
It already released its reserve wallet addresses on Nov. 16, the week after the FTX scandal began to unravel.
Related: Crypto.com releases proof of reserves, showing above 100% for BTC, ETH
As users pivot their attention to keeping their funds safe and exchanges accountable, many of the industry’s largest players have come out with similar transparency strategies.
Binance was the first to offer up its reserves for public viewing and pledge for a Merkle Tree-based system, which it then released two weeks later.
Though after it released some of its otherwise internal data, red flags were exposed in the exchange’s finances such as its corporate structure, BTC liabilities and internal control quality.
Gate.io and Huobi were also under scrutiny after they shared snapshots of their reserve using loaned money. Whereas Grayscale says it is hesitant to release anything due to security issues.
Jesse Powell (co-founder and CEO) of Kraken made a statement, stating that any proof of reserve efforts is meaningless unless there are client liabilities.