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<h2 id="header-0">Proof of Reserves is the new benchmark of trust.</h2>When Binance released its proof-of-reserves on 10th Nov 2022 - it started a trend amongst <a href="https://www.coingabbar.com/en/crypto-blogs-details/top-10-crypto-exchanges-you-should-know-about-coingabbar-blogs" rel="noopener noreferrer nofollow">centralized exchanges </a>to share their proof-of-reserves to gain the lost trust of their users. This became the benchmark of trust for centralized exchanges and was adopted by most of the other players in the industry.However, the recent reports released by the Mazars have raised suspicion about the credibility of the audits. According to market experts, choosing Mazars was the first red flag as Binance could easily approach the top four auditing firms. Deloitte, Ernst &amp; Young (EY), KPMG, and PricewaterhouseCoopers are the top four firms that could take up the auditing responsibilities for Binance, however, Binance chooses a mid-tier auditing firm that too on its own conditions for conducting its Proof-of-Reserves reports.Apart from that, Binance’s released proof-of-reserves shows a gap of 245 million dollars that claimed to be lent out (Binance claims to have collateral) to a third party and were out of bounds for Mazars. Also, Mazars did not release any reports disclosing the mechanism that it used for conducting the Binance audit.One more important thing to note here is that, right after releasing its proof-of-reserves reports, <a href="https://www.coingabbar.com/en/crypto-blogs-details/binance-backed-off-ftx-drama-looks-similar-to-twitter" rel="noopener noreferrer nofollow">Binance </a>moved billions of dollars worth of funds out of its reserve wallets to unknown wallet addresses. When the questions were raised, Binance cited the on-chain activity as nothing but security measures for moving funds to secured cold wallets.<h3 id="examining-the-binance-s-released-reports">Examining the Binance’s Released Reports</h3>The credibility of a centralized exchange can only be verifiable by a proof-of-reserves released by the exchange that has clearly mentioned all the client liabilities excluding any unknown collateral, no negative balances, user-verifiable cryptographic proofs along with custodian signatures. However, all of them were missing from Binance’s released proof-of-reserves reports.<img src="https://academy-public.coinmarketcap.com/optimized-uploads/231738686c144d1a8c0c464605be7024.png" />Apart from that, there were no clarifications were given about BTCB and BBTC being equated with BTC while conducting the audit.John Reed Stark, President, of John Reed Stark Consulting LLC also shared his concerns on the released proof-of-reserves reports by Binance.<img src="https://academy-public.coinmarketcap.com/optimized-uploads/0e5692ebf4484f09b3f0648e0667bde8.png" />However, CZ, founder of Binance Centralized Exchange refused to accept it as anything serious and discarded all the claims by calling them nothing more than fear, uncertainty, and doubt. The FUD for Binance is hitting it badly as it recorded close to 1 billion of funds being withdrawn within the last 24 hours.Binance is the biggest player in the entire blockchain space and damage to its reputation is not good for the entire ecosystem. However, <a href="https://www.coingabbar.com/" rel="noopener noreferrer nofollow">CoinGabbar </a>is committed to providing its users with only the truth and we will continue to do so in the times to come.Also, Read - <a href="https://www.coingabbar.com/en/crypto-currency-news/fashion-tour-steps-into-the-metaverse" rel="noopener noreferrer nofollow">Fashion Tour steps into the Metaverse</a>

Is Binance’s Proof-of-Reserves Fake? Auditors Refuse To Vouch

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