from Hacker News

Kraken.com: Proof of Reserves

by kkm on 11/13/22, 3:46 PM with 20 comments

• by SilverBirch on 11/14/22, 10:56 AM

  This is great, because I was expecting a list of assets and instead I got an explainer on merkle trees. Honestly, it's pretty funny. Anyone who puts a penny in Kraken deserves to have it stolen if they believe stuff like this.

  The problem is we all know that this really doesn't mean anything. One of the funnier stories that went round this week was that in an effort to shore up their reputation one company actually published an address for their deposits that highlighted they'd accidentally sent a huge amount out of that address and then brought it back, when questioned they claimed they'd sent the transaction in error and the recipient later returned it. The obvious shell game being played here - you send the money over, they do the audit, you send it back, suddenly two insolvent companies both pass audits.

  It's just unfortunate because we all kind of know, you can't really trust these audits, because audits only really work when the people are being audited aren't highly motivated scam artists. Even if the funds do currently exist and are safe now, that doesn't help you if they disappear next week. The question isn't "are the funds there right now" the question is "can we trust you" and the answer is probably no.

• by adam_arthur on 11/14/22, 5:01 AM

  They say “backed by assets”

  Are those assets cash or cash equivalents? If not then they aren’t really backed at all.

  Saw a tweet from the kraken CEO stating they didn’t have exotic things on their balance sheet, only things like bitcoin. Well a bitcoin backing is pretty much just as bad.

  Do they convert customer deposits to bitcoin or not?

• by abbadadda on 11/13/22, 8:31 PM

  I’ve heard good things about Kraken. I’d be interested to learn more about who the founders are and how reputable they seem, as well as learning more about where the funding originates.

• by Stention314 on 11/13/22, 10:00 PM

  Funny, imagine something like this would actually be regulated.

  Mmhhh regulation to protect consumers... Mmhhh how could we make this possible? Sounds unrealistic to regulate something as big as a financial sector.

  Perhaps PoR could be a solution to something so unregulatable? Or perhaps just use what we have fine-tunes the last 100 years?...

• by ilrwbwrkhv on 11/14/22, 2:33 AM

  What is stopping them from just bribing the auditor?

• by rdtwo on 11/13/22, 5:46 PM

  Anyone holding crypto on exchanges is nuts.