Cheyenne, WY — February 7, 2022 — Kraken, one of the world’s largest digital asset exchanges, 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 the company’s custody.
Administered by Armanino LLP, the Proof of Reserves audit is the second of its kind conducted on our exchange since 2014, and it affirms that more than $19 billion worth of client bitcoin and ether is safely – and provably – on our platform. This includes the $3.5 billion worth of ether held in Kraken’s secure on-chain staking service, the industry’s leading ETH2 validator.
Though the audit covers just two of the over 100 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.
In the 13 years since the invention of Bitcoin, it’s estimated that more than $23 billion in digital assets have been lost to hacks and insolvencies. Through our commitment to continuing Proof of Reserves audits, we believe Kraken can mitigate critical risks to client funds.
“Security and transparency for our customers has been at the core of our culture as a company, and the core of our practices and operations from the very beginning,” said Jeremy Welch, Chief Product Officer at Kraken. “Regular Proof of Reserves audits will demonstrate that, for Kraken, our client security and safety are a top priority.”
With the announcement, 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.
“We offer Proof of Reserves because we’re passionate about this industry, and believe it is the future of finance and capital markets,” said Noah Buxton, blockchain practice lead at Armanino. “With this audit, we’re taking historical best practices from certified public accounting firms and applying them in a new way that’s 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.
Clients, too, can now verify their Bitcoin and Ether balances at the time of the audit, with a simple three-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.
We encourage all Kraken clients to verify the audit, and help improve the auditing standards.
For technical overview of the audit process, explaining how it leverages the transparency of public blockchains, please visit Kraken’s website.