The collapse of FTX has intensified market focus on the financial health and operational transparency of cryptocurrency exchanges. In response, many trading platforms have begun publicly disclosing their wallet addresses and sharing proof-of-reserves reports.
Binance, the world's largest exchange by trading volume, was among the first to publish its wallet information in early November. Other major exchanges, including OKX, Bitfinex, KuCoin, Crypto.com, Deribit, and Bybit, soon followed by releasing their own asset audits or reserve certificates.
Over the past month, allegations of fund mismanagement and insolvency have continued to surface across the sector. Several incidents of sudden user withdrawals from centralized platforms have further fueled anxiety. A climate of distrust, summarized by the sentiment that "no centralized exchange can be trusted," has been spreading. Data from Nansen reflects this trend, showing that Binance's reserves fell from $63.8 billion to $52.16 billion—a decrease of 18.24%.
Which Exchanges Gained User Funds?
Amid a broader climate of outflows, only two major exchanges, OKX and Crypto.com, recorded a net increase in their reserves over this period. OKX saw its reserves grow by $680 million, an increase of 11.72%, while Crypto.com's reserves grew by $540 million, up 22.5%.
Other exchanges generally mirrored Binance’s trend outflows, albeit to varying degrees. Deribit experienced the most significant relative drop, with reserves falling by more than half (55.53%). Huobi saw an 18.79% reduction, Bitfinex decreased by 15%, and KuCoin's reserves dropped by 10.74%.
Understanding Reserve "Cleanliness"
An exchange’s reserve cleanliness is a crucial metric. It refers to the proportion of its total reserves held in assets other than its own native platform token. Many exchanges issue such tokens, and the over-reliance on them became a critical weakness in the FTX collapse, where its reserve was heavily weighted toward its own FTT token.
A higher percentage of proprietary tokens in reserves equates to lower cleanliness and higher potential risk. Among leading exchanges, OKX and Deribit rank highest, both boasting a 100% clean reserve. Although OKX has its OKB token, it is not counted toward its asset reserves. Deribit does not have a native platform token at all.
Huobi and Bitfinex show the lowest cleanliness scores, at 68.25% and 64.48% respectively. Low reserve cleanliness can be dangerous; if user confidence wanes, the value of these proprietary tokens could collapse—just as FTT did—rendering them ineffective as a backing for user assets.
Dominance of Bitcoin and Ethereum in Reserves
The composition of reserves is also telling. Deribit, which specializes in Bitcoin and Ethereum options trading, holds over 97% of its reserves in these two assets—the highest concentration among all exchanges. Bitfinex, one of the industry's oldest exchanges, also holds more than half of its reserves in Bitcoin.
Both OKX and Crypto.com maintain nearly 50% of their reserves in a combination of Bitcoin and Ethereum. Conversely, Gate.io, KuCoin, and Huobi hold the smallest proportions of these primary assets in their reserves, at approximately 29%, 19%, and 12% respectively.
The Path Forward: Transparency and Security
User fund security is the non-negotiable foundation of both traditional finance and the digital asset ecosystem. It is akin to the security of a blockchain itself; if the base layer is not secure, the applications built on top of it become meaningless. All technological and model innovation must be built upon the bedrock of user asset safety.
As the primary service providers for nearly every crypto user, exchanges must make it their paramount mission to ensure users can deposit funds with confidence. Only with a stable base of assets can trading and ecosystem development truly flourish. In the weeks since FTX's failure, we've seen how some exchanges, like OKX and Crypto.com, have successfully garnered greater user trust through enhanced transparency and security measures, resulting in net positive inflows.
The move toward disclosing reserve cleanliness helps users understand the true composition of an exchange's holdings, preventing a repeat of the "filling the count" phenomenon seen with FTT. The hope is that more exchanges will participate in this movement toward transparency to aid in rebuilding crucial user confidence.
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Frequently Asked Questions
What is a Proof-of-Reserves (PoR) report?
A Proof-of-Reserves is an independent audit that verifies an exchange holds the assets it claims to hold on behalf of its users. It is a tool designed to increase transparency and provide assurance that user funds are fully backed.
Why is reserve cleanliness important?
Cleanliness measures how much of an exchange's reserves are held in high-quality, liquid assets like Bitcoin and Ethereum, rather than in its own native token. A high cleanliness score indicates stronger solvency and a lower risk of a collapse if the native token's value plummets.
How can users verify an exchange's health?
Users should look for exchanges that regularly publish audited Proof-of-Reserves reports from reputable firms. They can also cross-reference this data with on-chain analytics platforms like Nansen to see real-time wallet flows and reserve composition.
What does net inflow/outflow mean?
Net inflow means more funds are being deposited onto the exchange than are being withdrawn, often interpreted as growing user trust. Net outflow indicates the opposite, with more users moving their assets off the platform, which can signal declining confidence.
Are centralized exchanges safe?
While no centralized service is without risk, exchanges that prioritize transparency, secure custody, and independent audits are generally considered safer. The trend post-FTX is toward greater user verification of an exchange's financial health.
What are the safest assets to hold in a crypto exchange?
The most secure reserves are comprised of highly liquid and established assets like Bitcoin (BTC) and Ethereum (ETH). Exchanges with a high percentage of these in their reserves are generally better positioned to honor user withdrawals during volatile market conditions.