Phemex releases proof of reserves

Singapore-based cryptocurrency exchange Phemex recently announced that following the events surrounding the FTX collapse, theFTT token and loss of Alameda liquidityResearch, has not experienced any problems either in the operation of the platform, or even more so with customer funds. And now the exchange, fulfilling its promise, publishes a proof of the presence of reserves based on the Merkle hash tree.

Unlike other exchanges, Phemex's approach allowsusers to ensure that their funds are truly safe and backed up. Compared to simply displaying cold wallet addresses, as many exchanges have done, Phemex has taken a conservative approach and provides evidence of reserves based on a hashed code, rather than the words of a third-party auditor.

Phemex provides identifiedusers can view information about reserves on the corresponding panel using an individual hashed client identifier. The exchange provides indexation of user balances for the main 5 assets – BTC, ETH, USDT, USDC and USD. Additionally, Phemex announced that the number of assets included in the Merkle Hash Tree will be increasing in the near future.

After confirming personal balances,Users can navigate to the Merkle Hash Tree Proof of Reserves information and verify that their holdings are 100% covered by the exchange's reserves.

An important point that is also actively discussedin recent weeks, beyond the need for exchanges to publish the Merkle tree, is to provide proof of solvency. Phemex also complied with this condition by providing data for its cold wallets on the reserve confirmation page.

Access to shared balances for five major assetsopen on the platform. At the same time, Phemex declares with full responsibility that it has no outstanding corporate debts. And calls on all users to check the availability of reserves and solvency of the exchange.

Events in the industry shocked the crypto community andled many to question the credibility of centralized exchanges. At the same time, this is not the first time that hundreds of billions of dollars of capital have been rapidly leaving the market, causing panic. After the collapse of FTX, a wave of bankruptcies arose, and all this leads to a rapid decrease in the capitalization of the crypto market and a decrease in trading volume. The community is waiting for specifics, and therefore the obligation of exchanges to clearly and 100% confirm the availability of reserves and overall solvency, which should contribute to transparency, and therefore the safety of users' assets.

Phemex launched in 2019 with just 3 pairscontracts, while skillful development and management allowed it to take a significant place in the market, but at the same time, the assets under its management can be considered small compared to large players. However, the Phemex fund, which began with derivatives trading, after the inclusion of traditional spot trading, has become more significant and required better risk management, which the exchange successfully implements.

However, it should be noted that negativethe events due to the fall of FTX have cleared the market of bad assets and are leading to the formation of a transparency factor in relation to the funds managed by this or that exchange. Transparency and security should become the main industry standard. And because Phemex publishes proof of reserves, acting as one of the market leaders in this matter.