Deribit showcases proof of reserves as FTX bankruptcy launches panic in the crypto market

Deribit showcases proof of reserves as FTX bankruptcy launches panic in the crypto market

Ethereum and Bitcoin option Exchange, Deribit, aired its reserves online to assure its clients of future safety against attacks on November 11. The organization’s announcement aims to maintain transparency and eliminate fear among its clients. 

Users urged to stay calm

Amid the hacks faced by Deribit, the crypto exchange announced to its users it is maintaining grounds and hopes as they are glad to give transparency in their holdings. Therefore, they are urged to evict any doubt or concerns.

“To avoid any doubt or concerns, we are happy to give transparency in our holdings.”

The crypto exchange is said to have vast addresses and gives an overview of the main one in use. The post only showcased BTC and ETH as the primary assets accumulating 53k and 533k, respectively. Other third parties are 6.6k (BTC) and 94K (ETH). 

To establish full transparency for all clients and whether they are included in the wallets listed, Deribit will publish proof-of-reserve assets dubbed Merkle tree in line with other central exchanges. A Merkle tree creates a digital fingerprint of the entire set of operations by adding up all the exchanges in a block. It improves the quality and consistency of Ethereum and Bitcoin’s information.

Additionally, Deribit has made an endpoint accessible to display cumulative margin locked (MM and IM per currency) from its entire user page.

Deribit shared a tweet that it had experienced a hot Wallet compromise and that $28 million worth of client funds had been stolen. According to the exchange, the hack happened on November 1, 2022. The hot wallets for BTC, ETH, and the stablecoin USDC were used to carry out the attack; these wallets have since been isolated for further investigation.

Deribit said:

“Deribit hot wallet compromised, but client’s funds are safe, and loss is covered by company reserves. Our hot wallets were hacked for USD 28m earlier this evening just before midnight UTC on November 1, 2022.”

Is Deribit close to the FTX narrative?

In recent data disclosed by the ETH block explorer, the hot wallet attacker had swiped 1,610 Ether or about $2.5 million to Tornado cash. The funds were transferred through 17 transactions, with the first unrestricted transaction on November 5—just a few days after Deribit came under attack.

Despite the attack, Deribit is non seemingly becoming in FTX’s category. A recent tweet by Nansen, a go tool for crypto analytics, demonstrated that the exchange still has $1 billion in holdings, a significant indication in the crypto ecosphere. In addition, the decentralized organization is part of the exchanges Nansen worked with in proving token holdings and transactions.

Nansen tweeted:

“We are working with exchanges to display pro-of-reserves for everyone to track their token holdings and transactions. Here’s the current list of exchange portfolios, and we will live to update this thread with more, so make sure you are following!”

Unlike Deribit, FTX has filed for Chapter 11 bankruptcy in the United States. Sam Bankman-Fried resigned as CEO of the company and was succeeded by John Ray III. Even though Bankman-Fried will be leaving his position, he will continue to assist the company in its transition.

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Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.