transparency - Pwim.Net

Proof-of-Reserves Becomes a Burning Issue amid FTX Crisis

The collapse of FTX, one of the leading crypto exchanges, sent shockwaves in the digital asset space.

With the liquidity issue being a primary contributor to the FTX crisis, the proof-of-reserves concept has engulfed the crypto sector, with more exchanges gearing towards showing more transparency. Crypto exchange Gate.io explained:

“What is Proof-of-Reserves? An audit by a 3rd party ensuring that a custodian holds the assets it claims to. A snapshot of all balances held is taken & aggregated into a Merkle tree, a privacy-friendly data structure encapsulating balances.”

As a data structure, a Merkle tree or Hash tree prompts data verification and synchronization. Therefore, it utilizes hash functions for data integrity and transparency purposes.

Binance CEO Changpeng Zhao (CZ) prompted the proof-of-reserves trend after pointing out that it would propel the crypto exchange’s transparency about its digital asset holdings. He stated:

“All crypto exchanges should do merkle-tree proof-of-reserves. Banks run on fractional reserves. Crypto exchanges should not. Binance will start to do proof-of-reserves soon. Full transparency.”

Market analyst under the pseudonym Tajo Crypto said:

“After the incident with FTX, CZ Binance introduced proof-of-reserves to help users know exactly how exchanges are handling their funds and prevent bank runs. Many exchanges quickly embraced the proof-of-reserves concept and promised to be more transparent.”

Binance published its latest proof of assets, which includes over 125,000 Bitcoins and 9,900 Ethereum and 1,250,000,115 Tether tokens. Meanwhile, Crypot.com said its company will be publishing its audited proof of reserves, CEO Kris Marszalek said in a tweet, noting that transparency is more important than ever in this critical moment for the industry, according to Bloomberg.

The rain started beating FTX based on its lack of crypto reserve transparency. Therefore, the proof-of-reserves seeks to inform the general public, especially depositors, if deposits match user balances.

Lucas Nuzzi, the head of research & development and CoinMetrics, acknowledged that FTX’s bailout of its research arm, Alameda, has come back to haunt the exchange. He said:

“I found evidence that FTX might have provided a massive bailout for Alameda in Q2 which now came back to haunt them. 40 days ago, 173 million FTT tokens worth over 4B USD became active on-chain. A rabbit hole appeared.”

Source: LucasNuzzi

On his part, market insight provider Nic Carter believes proof of reserves coupled with proof of liability equates to proof of solvency. He pointed out:

“Proof of Reserves is the idea that custodial businesses holding cryptocurrency should create public facing attestations as to their reserves, matched up with a proof of user balances (liabilities). The equation is simple (in theory): Proof of Reserves + Proof of Liability = Proof of Solvency.”

Meanwhile, Binance has revealed that it will not proceed with its acquisition of FTX, Blockchain.News reported.

Secret Network Validator Smart Stake to Shut Down Nodes

One of the most important validators for the privacy smart contract layer-1 blockchain. The Secret Network has declared that it would no longer provide the network with nodes or assistance after making this announcement.

On the 29th of January, the main validator Smart Stake made the announcement that it will turn down its Secret Network validator nodes on the 21st of February.

As justification for the discontinuation of its services, Smart Stake claimed “complicated and stressful validator operations, the expense and effort of validator operations, and recent events.”

Staking and validator services are provided by Smart Stake, which is a provider that works with many networks, including Crypto.com, Polygon, and Cosmos, as well as Secret Network up until very recently.

The decision was made in the wake of discoveries about the Secret Foundation’s lack of financial openness made by the founder of Secret Labs, Guy Zyskind.

On January 28, Zyskind made public allegations that the foundation and its founder and CEO, Tor Bair, “sold a substantial amount of USD worth of SCRT” in late 2021. SCRT is the native token for the Secret Network. Zyskind’s allegations are based on the fact that SCRT is the native token for the Secret Network.

In his allegations, he said that “Tor cashed out a considerable percentage of these revenues.”

In the report for the foundation’s fourth quarter in 2021, Zyskind also stated an inflow of four million dollars, but he did not disclose the withdrawal.

This activity was not revealed in any financial reports that were released to the community by the Foundation, which on several times was presented by Tor as a charitable entity.

On the other hand, Bair shared his perspective of the events on the Secret government forum the very same day. He claimed that the withdrawals were a portion of the vested tokens that were rightfully his.

“Instead of paying me out my vested tokens in December 2021, I changed my vested part of tokens to USD at the OTC price, and Secret Foundation distributed these cash as a dividend,” the author writes. “

He went on to say that “this information is verified in our 2021 tax filings,” adding that “Labs has already seen these files, and I have previously shared this information to them.”

At least one network validator provider and the community of the ecosystem have been unsettled by the continuing disagreement inside the leadership of the organisation.

Since the beginning of this week, SCRT prices have been unaffected by the internal kerfuffle and have been stabilising around the $0.80 level. However, the coin is now trading at a price that is 92% lower than its all-time high of $10.38 reached in October 2021 and Bair’s original price of $7.

Binance Adds 11 Tokens to PoR Report

The proof-of-reserves (PoR) report of Binance, which is one of the most important and biggest cryptocurrency exchanges in the world, has been updated to include 11 new assets. MASK, ENJ, WRX, GRT, CHR, CRV, 1INCH, CVP, HFT, SSV, and DOGE are the tokens that are accounted for in the Proof of Reserves report. With this most recent upgrade, the total number of assets in Binance’s PoR system has increased to 24, with a combined worth of more than 63 billion dollars.

The Proof of Reserves (PoR) mechanism that Binance has developed is intended to give its customers with both transparency and certainty about the safekeeping of their funds. Binance claims that its Proof of Reserves (PoR) makes use of Merkle trees to add up the data that is stored on the chain. This helps to guarantee that customers’ assets are retained for them on a one-to-one basis.

The adoption of the Proof-of-Reputation (PoR) approach by other cryptocurrency exchanges comes at the same time as Binance’s Proof-of-Reputation (PoR) system is being expanded to include other coins. This comes as a direct result of the failure of FTX, which brought to light the need of more openness within the cryptocurrency sector.

Nevertheless, a number of specialists have cautioned that the PoR technique has a number of drawbacks. For instance, it does not give any information on the use of leverage, collateralization, or the proof-of-liabilities that correlate to these concepts. This information may only be disclosed if the PoR is accompanied with financial documents that detail the company’s financial position.

Binance released a significant improvement to their PoR system in February 2023, which included the incorporation of zk-SNARKs. This is an example of a zero-knowledge proof, which is a kind of proof that enables the verification of data without disclosing the data itself. According to Binance, this will result in an improvement in the level of privacy and security afforded to user data during the verification process.

In conclusion, the incorporation of 11 more tokens into Binance’s Proof-of-Residence (PoR) system is a step in the direction of improved user confidence and visibility. Nevertheless, it is essential to keep in mind that the PoR approach is not without its flaws, and users should always proceed with extreme care whenever they engage in the usage of cryptocurrency exchanges.

Binance Responds to U.S. Senators Letter, Excludes Financial Data

Binance has been the subject of regulatory scrutiny on a global scale, with a number of nations implementing limits or completely banning its services as a result of allegations of regulatory infractions. The Securities and Exchange Commission (SEC) in the United States initiated an investigation into Binance.US in February over trading entities that are reportedly tied to Changpeng “CZ” Zhao, the CEO of Binance. An investigation report indicated that Binance was likely responsible for the transfer of around 400 million dollars in money from a Binance.US account to a trading business run by Zhao.

In their letter, the senators from the United States, lead by Elizabeth Warren, expressed their worries over the operations of Binance and asked for the firms’ balance sheets, AML rules, and documentation regarding the link between Binance and Binance.US. The senators charged that Binance and its American affiliate intended to circumvent authorities in the United States, evade sanctions, and assist the laundering of at least $10 billion in illicit funds. Previous statements made by Binance indicate that the two businesses are distinct organizations, each with its own autonomous management and activities.

Binance’s Hillman mentioned in his response to the senators’ letter that the cryptocurrency exchange uses both in-house and third-party tools to monitor user transactions and profiles in real time. As a result of alerts generated by transaction monitoring, Binance was able to halt more than 54,000 transactions between August 2021 and November 2022. Binance didn’t address the senators’ concerns about the exchange’s lack of openness, despite the fact that it had already provided the financial data that had been sought to the U.S. authorities. Instead, it omitted the information from the letter it had sent to the senators.

As a whole, it is probable that Binance’s answer is an effort to soothe worries and strengthen its relationship with U.S. authorities, who have been clamping down on cryptocurrency exchanges and other participants in the sector. Yet, Binance’s regulatory difficulties are far from being resolved, and it is possible that the exchange may be subjected to more scrutiny in the months ahead as authorities work to assure compliance with AML and other legislation.

Binance responds to US senators' request

Binance, one of the world’s largest cryptocurrency exchanges, has responded to a letter from US senators sent on March 2nd, which raised concerns about the exchange’s activities and requested financial data. The senators, led by Elizabeth Warren, claimed that there is evidence that Binance and its American arm attempted to evade US regulators, evade sanctions and facilitated the laundering of at least $10 billion. They requested “all Binance and Binance subsidiary balance sheets from 2017 to the present,” as well as Anti-Money Laundering and similar policies, and documents about the relationship between Binance and Binance.US.

Binance’s response, which was reportedly sent to US regulators but did not include the financial data requested by the senators, was a 14-page document that emphasized the exchange’s compliance efforts and recognized past mistakes. Binance’s chief strategy officer, Patrick Hillman, noted in the letter that the exchange has built solid Know Your Customer and Anti-Money Laundering policies in recent years and leverages both internal tools and tools from established third-party vendors to scan user transactions and profiles in real time. Hillman also stated that between August 2021 and November 2022, Binance stopped over 54,000 transactions as a result of transaction monitoring alerts.

Despite Binance’s emphasis on compliance, the exchange’s response failed to address the senators’ concerns about transparency. The senators had claimed that “what little information about Binance’s finances is available to the public suggests that the exchange is a hotbed of illegal financial activity.” Binance has previously stated that Binance and Binance.US are separate entities with independent management and operations.

The US Securities and Exchange Commission (SEC) launched a probe into Binance.US in February regarding trading firms alleged to be connected to Binance CEO Changpeng Zhao. An investigative report has suggested that Binance was behind a transfer of roughly $400 million in funds from a Binance.US account to a trading firm managed by Zhao. The exchange has also faced regulatory scrutiny in other countries, including the UK and Japan.

Binance Insider Allegedly Helps Users Bypass KYC Security Protocols

Binance, the world’s largest cryptocurrency exchange, has faced accusations of enabling money laundering and facilitating criminal activities in the past. In response to the FTX scandal, Binance has made significant efforts to enhance transparency in the industry. However, a recent CNBC investigation suggests that Binance insiders are allegedly aiding users in China to bypass the exchange’s security protocols.

According to the report, employees and volunteers at Binance have been providing assistance to customers in China to circumvent KYC controls. Binance’s Chinese-language chat rooms reportedly had over 220,000 registered users who could access shared messages on techniques to bypass KYC, residency, and verification protocols. The messages allegedly originated from accounts identified as employees of Binance or trained volunteers known as “Angels.”

The allegations made in the CNBC report raise concerns about Binance’s commitment to transparency and regulatory compliance. Binance has faced regulatory scrutiny in several countries, including the United States, Japan, and the United Kingdom, over its operations and compliance with anti-money laundering regulations.

Binance has responded to the allegations made in the report, stating that it takes compliance and security seriously and has a zero-tolerance policy for any misconduct by employees or volunteers. Binance also stated that it has a dedicated team to monitor and prevent any suspicious activities on its platform.

The report by CNBC is the latest in a series of allegations against Binance. The exchange has faced accusations of facilitating money laundering, terrorist financing, and other illegal activities. The allegations have prompted regulatory authorities in several countries to investigate Binance’s operations and compliance with anti-money laundering regulations.

In conclusion, the allegations made in the CNBC report are a cause for concern for Binance, as they raise questions about the exchange’s commitment to regulatory compliance and transparency. Binance will need to take decisive actions to address these allegations and demonstrate its commitment to operating in a transparent and compliant manner.

Bitget Becomes the First Centralized Exchange to Offer Financial Transparency Through Space and Time

Victoria, Seychelles, 27th March, 2023, Chainwire

Bitget, the largest crypto copy trading platform, has announced a strategic partnership with Space and Time (SxT), a leader in decentralized data warehousing. The partnership will enable Bitget to offer users unparalleled transparency of exchange operations with a verifiably tamperproof audit trail of data and computation.

Bitget is the first centralized exchange to leverage a decentralized data warehouse. The trustless Space and Time platform will provide Bitget users with verifiable evidence that the exchange holds the assets it claims to own on behalf of its clients. Bitget users will also have full transparency about the exchange’s activity, liquidity, assets, and liabilities with the assurance that the data and computation powering the exchange are accurate and haven’t been tampered with.

Bitget has launched its Proof of Reserves Page to demonstrate to users that it is a full-reserve exchange. Bitget’s Proof of Reserves (“PoR”), which uses the cryptographic-audited Merkle tree method, will also validate that users’ assets stored on the platform are safeguarded. To support further transparency, the exchange will work with Space and Time, which allows Bitget to provide proof of accounting and assure its users that all exchange operations are both valid and verifiable. Total reserve ratio is 231% according to the data as of Mar 6th 2023, which means Bitget holds more than 100% of the users’ total assets (BTC, ETH, USDT, USDC).

“Bitget strives to be the all-in-one global trading platform, and our partnership with Space and Time highlights our commitment to that,” said Gracy Chen, Managing Director of Bitget. “More than ever, users want to see transparency from exchanges. Bitget is first to work toward transparency of proof of accounting and operations through Space and Time. We aim to inspire people to embrace crypto with more protection, transparency and security, which serve as pillars for building a robust platform.”

Space and Time is the first decentralized data warehouse that joins tamperproof on-chain and off-chain data. Space and Time has developed a novel cryptography called Proof of SQL that cryptographically proves that query computations were done accurately and that both the query and the data are tamperproof.

“Space and Time is building the foundation for a verified and transparent financial economy,” said Nate Holiday, CEO and Co-Founder of Space and Time. “We’re thrilled to work with Bitget to provide market-leading proofs for accounting and verifiability of operations. This partnership marks a new era of transparency for centralized businesses.”

Bitget will leverage the Space and Time data warehouse to run verifiable computations against verifiable on-chain and off-chain data. The transparency enabled by Space and Time will help Bitget strengthen the trust it has built with its growing user base as it continues to expand its product offerings to become a one-stop investment solution.

About Bitget

Bitget, established in 2018, is the world’s leading cryptocurrency exchange with futures trading and copy trading services as its key features. Serving over 8 million users in more than 100 countries and regions, the exchange is committed to helping users trade smarter by providing a secure, one-stop trading solution. It also inspires individuals to embrace crypto through collaborations with credible partners, including legendary Argentinian footballer Lionel Messi, the leading Italian football team Juventus, and official eSports events organizer PGL. According to Coingecko, Bitget is currently a top 5 futures trading platform and a top 10 spot trading platform.

For more information, visit: Website | Twitter | Telegram | LinkedIn | Discord

About Space and Time

Space and Time is the first Web3-native decentralized data warehouse that joins tamperproof on-chain and off-chain data to deliver enterprise use cases to smart contracts. Space and Time has developed a novel cryptography called Proof of SQL™ that allows developers to connect analytics directly to smart contracts, opening up a wealth of powerful new use cases and business logic on blockchain technology. Space and Time is built from the ground up as a multichain data platform for Web3 developers in financial services, gaming, DeFi, or any project requiring next-gen analytics.

For media inquiries, please contact: Spencer Reeves, marketing@spaceandtime.io

Contact

Sylvia Huangmedia@bitget.com

Browser Extension Reveals Twitter Blue Accounts

Twitter users have been able to verify their accounts for a monthly fee since the launch of Twitter Blue in November 2022. This has led to a flood of verified accounts, some of which are associated with spam bots and fake information. The introduction of a Know Your Customer requirement did little to deter trolls from taking advantage of the service.

To address this issue, a browser extension called “Eight Dollars” has been created. It helps users differentiate between accounts that have paid for verification and those that have earned it through the traditional process. For accounts that have paid for verification, the extension displays a “paid” text next to the blue checkmark. For others, it simply shows “verified.”

The extension provides transparency to the Twitter platform and helps identify scam accounts, as evidenced by positive reviews from users. This has been welcomed by users who are concerned about the flood of verified accounts that have made it difficult to identify legitimate accounts.

Elon Musk, the CEO of Tesla and SpaceX, was involved in the launch of Twitter Blue, which was designed to discourage spam bots and fake accounts. However, he and other tech industry leaders recently signed an open letter calling for a halt to the development of artificial intelligence. This has split opinions, with some entrepreneurs, such as Coinbase CEO Brian Armstrong, believing that every technology poses a certain amount of danger, and the goal should be to keep moving forward.

In conclusion, the “Eight Dollars” browser extension provides a useful tool for Twitter users who are concerned about the flood of verified accounts on the platform. It helps distinguish between legitimate accounts and those that have paid for verification, which has reintroduced user doubt. While there are differing opinions on the development of artificial intelligence, transparency on social media platforms is crucial in identifying scam accounts and restoring user trust.

Solana Launches Real-Time Carbon Emissions Tracking Dashboard

The Solana Foundation has launched a real-time tracking dashboard to measure carbon emissions on its blockchain. The foundation collaborated with data platform Trycarbonara to create the dashboard, which is the first “major smart-contract blockchain” to measure carbon emissions in real-time. This marks an important step towards promoting transparency and accountability in the blockchain industry.

The new dashboard can be found on the Solana Climate website and displays the total node count, megawatt-hours, total carbon emissions average, and marginal use, alongside numerous other indicators. Furthermore, it contains several emissions comparison charts where users can view side-by-side conversions depicting Solana usage versus numerous other emission-producing activities.

According to a blog post from the foundation, the organization hopes that this initiative will set a new standard for measuring emissions in blockchain by publishing this data. The data used to power the Solana Foundation’s real-time carbon emissions dashboard is available open-source and is modeled on the estimated carbon footprint of the Dell PowerEdge R940.

It remains to be seen whether other blockchain outfits will adopt similar tracking systems, but this move from the Solana Foundation comes amid increasing global efforts to utilize blockchain technology to monitor carbon emissions around the world.

As part of its “Shaping Europe’s digital future” initiative, the European Commission has praised blockchain’s ability to serve as a foundation for the accurate measurement of carbon emissions in any sector. In an article on the EU’s digital strategy blog, the commission wrote, “Blockchain can be utilised through smart contracts to better calculate, track and report on the reduction of the carbon footprint across the entire value chain.”

This move towards using blockchain to track carbon emissions is particularly relevant given the global climate crisis and increasing demand for more sustainable and eco-friendly practices.

In the United States, President Joe Biden recently floated budget plans that would add an excise on electricity used for cryptocurrency mining in the amount of 30%. This shows that the government is also taking steps towards addressing the energy consumption concerns of the cryptocurrency industry.

Overall, the Solana Foundation’s real-time carbon emissions tracking dashboard is a positive step towards promoting transparency and accountability in the blockchain industry. As more blockchain outfits follow suit, the industry will become more eco-friendly, which is crucial for achieving a sustainable future.

EU Drafts AI Bill to Address Copyright Concerns

Concerns over the usage of copyrighted material have risen to the forefront as the use of artificial intelligence (AI) in the production of content becomes more commonplace. In response to these concerns, legislators in the European Union have approved a draft law with the intention of regulating both the firms that produce the technology and the technology itself.

The law, which is a component of the Artificial Intelligence Act of the EU, intends to categorize AI technologies according to the amount of danger they pose. The risk categories range from acceptable to unacceptable, with unacceptable being the highest. The use of high-risk instruments won’t be completely outlawed, but rather they’ll be subject to more stringent disclosure rules. It will soon be necessary for generative AI tools such as ChatGPT and Midjourney, among others, to report any usage of copyrighted resources made in the course of their AI training.

During the subsequent phase of debates among the legislatures and member states, the particulars of the law will be refined to their final form. According to Svenja Hahn, a member of the European Parliament, the bill in its current form strikes a balance between excessive levels of monitoring and excessive levels of regulation. This balance protects people while also encouraging innovation and contributing to economic growth.

The data watchdog for the European Union has voiced worry about the possible difficulties that artificial intelligence (AI) businesses in the United States may have if they do not comply with the General Data Protection Regulations.

Additionally, the European think tank known as Eurofi, which is comprised of organizations from both the public and private sectors, has published a magazine that features an entire section devoted to the applications of AI and machine learning in the financial sector of the EU. All of the mini-essays featured in this section touched on the forthcoming Artificial Intelligence Act in some way. They were on the topic of artificial intelligence (AI) innovation and regulation inside the EU, namely for usage in the financial sector.

One of the authors, Georgina Bulkeley, who is also the director for EMEA financial services solutions at Google Cloud, stressed the significance of AI regulation by stating that the technology is “too vital not to regulate. In addition to this, it is of insufficient significance to not properly regulate.”

In general, the proposed legislation represents a substantial advance toward the goal of regulating the use of AI and works protected by copyright in the EU. As the technology continues to improve and become more widespread in a variety of sectors, it is essential to ensure that it is used in a transparent and ethical manner in order to safeguard both customers and companies.