Gate.io joined the list of exchanges in a rush to publish their proof of reserves, a deeper look at their books and audit however suggests a different narrative.
The rush was necessitated to restore investor confidence in cryptocurrency exchanges following the crush of the FTX exchange and its sister company Alameda Research. Before its crash, FTX ranked as the third-largest crypto exchange by trading volume. A week-long fiasco ended with the platform seeking bankruptcy protection in the United States.
Other exchanges that have published their reserves include Crypto.com, Binance, ແລະ Coinbase.
Gate.io “Proof-of-reserves’’ audit
A quick browse search of Gate.io’s ‘proof of reserves’ leads curious users to a downloadable report on the platform website. Apart from the report is a quick overview of the exchange’s reserves which suggests a 108% BTC reserve ratio, a Merkle tree root hash, and a 104% ETH reserve ratio.
The report dated 28 October 2022, supposedly an audit by Armamino, turns out to be an ‘Agreed-Upon Procedures Report’ and not an actual audit.
An Agreed-upon procedures report is a report outlined by a company or client when it hires an external party to perform an audit on a specific test or business process. Also referred to as audit standards, they are designed and agreed upon by the entity conducting the audit, as well as any appropriate third parties.
On Twitter, Gate.io reiterated the report as an audit by Armamino that captured part of the exchange’s reserves.
The report caught the eye of crypto analysts and one, in particular, Bitcoin Vs Gold, dissect through the audit which is “very shady to say the least.”
Source: https://www.cryptopolitan.com/is-gateio-short-of-funds/