South Korean cryptocurrency exchanges have shortened the interval for reconciling their ledgers with actual holdings to less than five minutes following Bithumb's mistaken bitcoin payout, but their detailed disclosures remain thin.
Major overseas exchanges including Binance, OKX and Kraken operate proof-of-reserves (PoR) systems that let users verify directly whether their own deposits are included in the total customer assets reported, according to financial industry sources on the 22nd.
Binance publishes monthly figures for both customer deposits and exchange-held assets, along with the addresses of the wallets where the assets are actually stored. It also uses technology such as Merkle trees, which cryptographically link individual pieces of data to confirm whether specific information is included in a larger data set, allowing users to verify that their balances are reflected in the reported total. OKX likewise discloses wallet addresses and offers a separate verification tool that lets users check on-chain wallet balances and confirm whether individual customer deposits are accounted for.
Korean exchanges, by contrast, go no further than disclosing the ratio of actual holdings to customer assets. Upbit and Bithumb, the two largest, along with Coinone and Gopax, publish only the ratio of coins they hold to the amount they are required to hold on their websites. Digital X (Flatta), a smaller Korean exchange, is among the few that disclose specific quantities and wallet addresses.
The problem is that a holdings ratio alone makes it difficult to verify the accuracy of the figures disclosed. Even if an exchange reports a ratio of 100%, users have no choice but to rely on the number the exchange provides unless specific quantities and wallet addresses are made public. An official in the cryptocurrency industry said exchanges should raise the credibility of their disclosures by providing wallet addresses and individual balance verification features, as overseas platforms do.