Letter from the CEO — Proof-of-Reserves Is A Must For Leading Exchanges

In my first Letter from the CEO, published in August, I wrote about transparency in the age of blockchain technology and how industry leaders need to operate as transparently as possible. With recent developments, I felt the need to revisit the topic with specific focus around Proof-of-Reserves after recent events.

Proof-of-Reserves Are More Important Than Ever

In 2020, Gate.io became the first mainstream crypto exchange to submit to a Proof-of-Reserves audit, cryptographically proving that user deposits were safely held by the platform through a Merkle Tree and earning a patent for the method in the process. We recently tapped the same independent third-party auditing firm, Armanino LLP, to conduct another audit, and we’re pleased to announce the results were, of course, positive.

The report, which was published on the 19th of October 2022, showed that Gate.io held 108% in Bitcoin and 104% in Ethereum collateral in reserve, exceeding the total amount of assets deposited on our platform by users. Since 2020 we’ve also allowed users to manually check that their assets are held in reserve by making use of the same Proof-of-Reserves Merkle Tree Generator that Armanino LLP used to audit and verify the exchange’s holdings.

Additionally, Gate.io has a Secure Asset Fund for Users (SAFU) worth $100 million in place to protect both users and our native GateChain ecosystem. The company intends to continue strengthening and building on this fund to ensure the safety of our users and the GateChain ecosystem.

During the course of 2022, there has been a spate of major bankruptcies and insolvencies in the crypto space causing market-wide turmoil and uncertainty throughout the year. Exchanges, both big and small, need to be held accountable for their actions, or inaction, and Proof-of-Reserves needs to become an industry-wide requirement.

Sharing Our Expertise

Having spent over two years working on our Proof-of-Reserves system and obtaining a patent to the process, we feel the need to share our experience and expertise to expedite the adoption of Proof-of-Reserves systems on platforms across the world. In order to help promote an inclusive crypto ecosystem, built on trust and transparency; Gate.io will be disclosing our technical solutions and open sourcing the code used in our Proof-of-Reserves verification system.

This will be offered to the entire industry for free with the intent on promoting transparency in the wider crypto landscape and to push for more open collaboration in certain areas of the market that will drive healthy, positive growth. Our main priority is the safety and security, not just of our users, but the millions of crypto users across the world.