Does Your Centralized Exchange Show Proof of Reserves?

With the FTX saga unfolding a little more every day, one of the catalysts for the downfall was the crushing of the FTT exchange token for FTX; once Binance determined that FTX was potentially insolvent, they initiated liquidation of their stake of the FTT token. When you sell $2Billion of assets in the crypto market, it tends to push the bid further and further down. Today, FTT is trading for less than $2, down from $26 right before the “event.” 

So what are some other exchange tokens that might also be at risk? When you bankroll your operations based on your own coin, that can lead to insolvency. Markets are Machiavellian in how they seek to find weakness, so let’s see what other exchanges might be at risk from a coordinated attack. (Note that I’m not evaluating these exchanges/tokens based on their finances, but rather by how well their exchange tokens are able to maintain market power)…

BNB

Launched in July 2017, Binance is the biggest cryptocurrency exchange globally based on daily trading volume. The BNB exchange token has held support at $280, and the next level of support is at $200. While it’s had a rough week, the BNB coin looks to be strong and CZ has spoken to the fact that Binance is not dependent on BNB for daily cash flows nor counter-party risk arbitrage. 

Cronos

Cronos (CRO) is the native cryptocurrency token of Cronos Chain — a decentralized, open-source blockchain developed by the Crypto.com payment, trading, and financial services company. The CRO token is currently under heavy attack and has recently dropped from $.13 down to $.06. While Crypto.com has published “proof of reserves” they recently suspended USDC and USDT deposits and withdrawals on Solana. Looks like there is currently a “run” on CRO assets.

UNUS SED LEO

UNUS SED LEO is a utility token that’s used across the iFinex ecosystem; the cryptocurrency allows Bitfinex users to save money on trading fees. There is very strong support at $3.80, which is where the price is as I write this. If LEO breaks $3.80 it could be a quick trip down to $1.40. 

FTX Token

FTT is the native cryptocurrency token of the crypto derivatives trading platform FTX launched on May 8, 2019. The FTT token is under attack over the past week and has dropped in value from about $26 to below $2. The only question at this point is whether a white knight will find any assets to purchase and resurrect this platform, which was the #3 exchange up until last week. 

KuCoin Token

KCS is the native token of KuCoin, which was launched back in 2017 as a profit-sharing token that allows traders to draw value from the exchange. It was issued as an ERC-20 token running on the Ethereum network and was supported by most Ethereum wallets. This coin is currently under attack and has dropped in value from $10.50 to about $6.50 as I write this. Price support for this token might be as low as $1. I don’t have any information regarding KuCoin’s proof of reserves, as a recent statement showed that they would be ready “in a month” from the Nov 9 statement date. That might create enough uncertainty to initiate a continued run on assets until the POR are produced. 

Huobi Token

Huobi Token (HT) is the native token of the cryptocurrency exchange Huobi Global. It is a decentralized digital asset based on the Ethereum blockchain and is ERC-20 compliant. There is currently a run on Huobi Token’s HT token, dropping from $9.50 to below $4 currently. Huobi Global, once China’s top crypto exchange, published an asset transparency report on Sunday to reassure users that its funds remain safe.

As of Nov. 12, the exchange held 191.84 million of its own native token HT ($900 million), 9.7 billion TRX, 820 million USDT, 274,000 ETH and 32,000 BTC, and 191.84 million HT tokens and several other coins, including ATOM, ADA, BCH, DOGE, DOT, MATIC, SHIB and ETC.

The total estimated value of reserves was $3.5 billion. 

OK

OKB is a cryptocurrency released by the OK Blockchain Foundation and Maltese crypto exchange, OKEx. The exchange is one of the largest in the world and currently ranks third in liquidity, fourth in trading volume, and provides a wide selection of trading pairs. The OKB token is currently holding value at $18, and while the value has recently dropped from $24, does not appear to be under extreme pressure at this point. Proof of reserves is supposed to be produced in about a month. 

GateToken

GateChain is a public blockchain dedicated to asset safety. The GT token has recently dropped from $4.80 to $3.40 and is under pressure. I have no information on GateChain’s finances other than their parent Gate.io has promised to publish Merkle Tree reserve certificates within a month.

WOO Network

WOO Network is a deep liquidity network connecting traders, exchanges, institutions, and DeFi platforms with democratized access to the best-in-class liquidity and trading execution at lower or zero cost. WOO Token is used in the network’s CeFi and DeFi products for staking and fee discounts. Their WOO token has come under pressure from $.20 to $.12 and I have no information about their proof of reserves.

MX TOKEN

MX TOKEN (MX) is a decentralized digital asset developed by the MEXC platform based on the Ethereum blockchain. The MX token has dropped from $1.10 to $.85 with support levels at $.50.