Kraken launches proof of reserves audits for verifying crypto balances

Jeremy Welch, the Chief Product Officer at Kraken

Kraken has announced its implementation of next-generation auditing standards designed to let clients prove their bitcoin and ether balances are backed by real assets held in our custody.

Administered by Armanino LLP, the Proof of Reserves audit is the second to be conducted on our exchange and it affirms that more than $19bn of bitcoin and ether is safe on our platform.

This includes $3.5bn of ether held in secure on-chain staking service, a leading ETH2 validator.

Though the audit covers just two of the over one hundred assets available for trading on our exchange, it adheres to, and seeks to advance, recommended standards for new cryptographic audits that we hope will become widely embraced in the digital asset sector.

Kraken’s commitment to mitigate digital fraud

Since the invention of Bitcoin, it’s estimated that more than $23 billion in digital assets have been lost to digital hacks and company insolvencies. Through our commitment to continuing Proof of Reserves audits, we believe Kraken can mitigate critical risks to client funds.

Jeremy Welch, the Chief Product Officer at Kraken offered additional insights.

“Security and transparency for our customers has been at the core of our culture as a company and has also been the core of our practices and operations from the very beginning.”

“Regular Proof of Reserves audits prove that our client security and safety are a top priority.”

Kraken welcomes Armanino aboard

Armanino has agreed to perform Proof of Reserves audits for Kraken semi-annually, following the attest standards used by the American Institute for Certified Public Accountants, a regularity intended to ensure Kraken meets rigorous standards for accountability.

Noah Buxton, the blockchain lead at Armanino said, “We offer Proof of Reserves as we’re passionate about this industry, and believe it is the future of finance and capital markets.”

“With this audit, we are taking historical best practices learned from certified public accounting organisations and applying them in a fresh new way that is incredibly exciting.”

This regular transparency is designed to minimize trade-offs for client data privacy.

Kraken will provide Armanino only anonymized balance information, meaning no sensitive client data is exchanged. A technical overview of the audit process that helps in explaining how the system leverages the transparency of public blockchains, can be found on our website.

Clients can verify their bitcoin and ether balances on our exchange at the time of the audit, with a 3 step process accessible in their accounts. The verification will reflect account balances at the time of the audit, but will not include any subsequent trades or deposits.

Kraken clients should verify the audit and help us improve our auditing standards.