On Feb. 22, cryptocurrency exchange MEXC Global released its proof-of-reserves (PoR) snapshot after 45 days of testing. In a document seen by Cointelegraph, MEXC claims its reserve ratios for Tether (USDT), USD Coin (USDC), Bitcoin (BTC), and Ether (ETH) were 120.70%, 240.18%, 116.50% and 110.53%, respectively, via the Merkle tree method.
As of the date of the snapshot on Feb. 10, MEXC held 232.4 million USDT, 33 million USDC, 1,869 BTC and 12,472 ETH in custodied user assets. Meanwhile, the total assets held within MEXC wallets for the four cryptocurrencies were 280.6 USDT, 79.4 million USDC, 2177.5 BTC, and 13,785.6 ETH. A spokesperson for MEXC told Cointelegraph:
“MEXC will provide monthly updates on users’ asset data through the Merkle tree. This proof considers strong proof that our users’ assets are available for 1:1 redemption at any time. As the industry becomes more regulated, we may disclose additional data that our users need.”
The spokesperson said that the exchange also plans to establish an “MEXC Investor Protection Fund” on top of existing measures to safeguard users’ assets. Prior to the announcement, MEXC published a list of wallet addresses belonging to the exchange. When asked about regulation, the spokesperson explained that MEXC had obtained money service business licenses in the United States, Canada, Switzerland and Estonia and that “clear regulatory standards are so important for the entire industry.”
While exchanges have welcomed the PoR method as a gauge of financial health, other experts disagree. Jack Graves, a teaching professor of law at Syracuse University, told Cointelegraph Magazine that PoRs do not reveal other key information such as liabilities and leverage. “You can audit how many assets a crypto exchange has on-chain, but how much of it is pledged as collateral? That’s a lot harder to figure out unless you have access to their financial services, books, and records,” he explained.