Kraken successfully passed Proof of Reserves in November 2023.
The most recent proof of holdings included the most widely held cryptocurrencies: BTC, ETH, USDC, USDT, DOT, ADA, and XRP. Also included are public margin positions, futures balances, and on-chain staking amounts for those assets. In total, approximately 78% of all customer cryptocurrencies held on the platform were included in this latest proof.
We pioneered the proof of reserves process in 2014 and have been working to do this on a regular basis since January 2022.
Why This Matters
Proof of reserves is still a relatively new process. There is no universally accepted definition or requirement. Kraken’s Proof of Reserves includes independent third-party verification that we back your account holdings with in-kind, outright reserves.
Similar to the previous Proof of Reserves, we use Merkle trees to represent individual account balances that can be identified by a unique encrypted hash (string). We then hash these records successively until a single Merkle root hash represents the sum of the applicable client balances. This means that account balances can be included in the Proof of Reserves and easily verified without exposing the underlying unencrypted data set.
From this reserved proof, customers can now download the entire path within the Merkle tree from their account up to the root. They can review the configuration, better understand how Kraken’s proof-of-holdings process works, and personally verify the value and validity of the root hashes included in the report.
Kraken’s proof of holdings includes::
- Total of all customer debts (or balances)
- A means for customers to cryptographically verify that their account details and personal balances are included in the grand total.
- Third-party verification that Kraken has full control of on-chain assets in excess of these liabilities.
We hired The Network Firm, a registered CPA firm specializing in accounting and attestation services for cryptocurrency businesses, to certify that we were in full control of the wallets holding customer balances.
How can I find out more?
If you haven’t already, please log in to Kraken to see for yourself whether your balance was included in this review. Please keep in mind that this proof of holdings only applies to assets that were on the platform on November 30, 2023. Assets held on the platform before or after that date are not included in this report.
For more information, check out The Network Firm’s full report, accessible through our Verification Portal. Also check out What is Proof of Reserves? This is a beginner’s guide blog post. If you have additional questions, please contact Kraken Support.
These materials are provided for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, stake or hold any cryptocurrency or to engage in any particular trading strategy. Kraken does not and will not seek to increase or decrease the price of any particular cryptocurrency it offers. Some cryptocurrency products and markets are unregulated and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptocurrency market may result in loss of funds. Taxes may be payable on the appreciation and/or reporting of your cryptocurrency assets and you should seek independent advice on your tax position. Geographic restrictions may apply.
