Short answer: to verify crypto proof of reserves you log in to your exchange, open its proof of reserves page, download the record for your account and check that your balance sits inside the published Merkle tree. Then you compare the exchange's reserve ratio for each coin you hold. A ratio of 100% or more means the exchange showed it held at least as much as customers were owed on that one day.
After the record $6.3 billion Binance hack this check matters more than ever. Here is how it works and what it can and cannot tell you.
What is proof of reserves in crypto?
Proof of reserves (PoR) is an exchange's way of showing receipts. It has two halves.
- Liabilities. The exchange takes a snapshot of every customer balance and rolls them into a Merkle tree. That is a data structure that boils millions of balances into one fingerprint called the Merkle root. Change any balance by even a fraction and the root changes.
- Reserves. The exchange proves it controls wallets on the blockchain that hold at least that much of each coin.
Kraken explains on its proof of reserves page that an independent accountant takes the snapshot, collects signatures proving Kraken controls the wallets and confirms the reserves match or exceed client balances.
PoR spread after FTX collapsed in November 2022 and the SEC charged its founder over the diversion of FTX customers' funds. A balance on a screen is only a claim.
Why proof of reserves is in the news right now
On October 29 attackers drained about $6.3 billion from Binance hot wallets. See what happens if a crypto exchange gets hacked for the full story. Since then:
- New snapshot. Binance took a new PoR snapshot at 00:00 UTC on October 31 (8 PM ET on October 30) and posted it to its PoR site. Crypto Briefing reported a Bitcoin reserve ratio of 100.04%.
- Full proof pending. Binance said its zero-knowledge proof for checking your own balance is estimated by Tuesday November 3 (UTC).
- Withdrawals reopening. In its November 1 recovery update Binance began restoring withdrawals in phases starting with Bitcoin. It said it had covered about 95% of the stolen amount.
- New wallets. Binance refreshed its PoR wallet list. All withdrawals now leave from the new addresses.
How to verify crypto proof of reserves: step by step
- Find the official page. Go to the exchange's own site. On Binance it is Profile then Wallet then Verification. On Kraken Pro it is the account icon then Proof of Reserves. Never use a link from a text, DM or screenshot.
- Pick the right report date. Binance takes its regular snapshot on the 1st of each month at 00:00 UTC and releases results by the 7th.
- Copy your record. You will see a record ID or Merkle leaf ID plus your balances at snapshot time.
- Run the check. Paste your ID into the exchange's or accountant's verifier. Kraken uses the first 16 characters of your Merkle leaf ID. Binance also publishes an open-source verifier on GitHub for advanced users.
- Confirm the root. Make sure the root matches the one published for that date. A match means your balance was counted.
- Read the reserve ratio. Check the ratio for each coin you hold and who signed off.
New to exchanges and wallets? The free CCF Quick Start Guide walks you through safe first steps.
What proof of reserves proves and what it does not
| Question | Does PoR answer it? |
|---|---|
| Was my balance counted on snapshot day? | Yes, if your record is in the Merkle tree |
| Did the exchange control enough of each covered coin that day? | Yes, for the coins in scope |
| Were the reserves borrowed just to pass the check? | No |
| Does the exchange owe other debts like loans? | No, most reports skip those |
| Are funds still there today? | No, it is one moment in time |
| Is the exchange secure from hackers? | No |
| Is it the same as an audit? | No |
The PCAOB Office of the Investor Advocate warned in 2023 that PoR engagements are not audits and that the reports "do not provide any meaningful assurance to investors or the public." The SEC's chief accountant added that such non-audit work is "neither as rigorous nor as comprehensive as a financial statement audit."
Kraken admits PoR cannot rule out borrowed funds or theft after the review. Binance ran a monthly PoR program and the hack still happened.
How to read a reserve ratio
The reserve ratio is reserves divided by customer balances for one coin.
- 100% or more. The exchange showed at least one coin held for every coin owed. Binance's Bitcoin ratio of 100.04% clears the bar by a thin margin.
- A clear cushion. Kraken reported a Bitcoin ratio of 102.9% for its June 30 2026 snapshot.
- Under 100%. Treat it as a warning and ask why.
Who checked it matters too. In December 2022 auditing firm Mazars paused its work for Binance and other crypto clients. A monthly report with a long track record beats a one-off. Between reports DefiLlama's free exchange reserves dashboard tracks known exchange wallets.
Proof of reserves checklist: 8 red flags
- No PoR at all or a page with no dates
- Reserve ratio under 100% for a coin you hold
- No way to check your own balance
- Only some coins covered and yours is not one of them
- Reports that stop or skip months without explanation
- No named independent firm and no open-source verifier
- The exchange calls its PoR an "audit"
- Anyone offering to "verify" your account for a fee or asking for your password or seed phrase
That last one is always a scam. See crypto scams to avoid.
Use AI to read a proof of reserves report
AI can turn a dense PoR report into plain English in seconds. Paste the report text into ChatGPT or another assistant:
"Summarize this proof of reserves report for a beginner. List the snapshot date, which coins are covered, the reserve ratio for each, who performed the check and any limits the report admits. Flag anything that looks unusual."
Then check every number against the original because AI can misread tables. See ChatGPT for crypto research.
What to do with the result
A passing result is a good sign, not a guarantee. Keep only your trading balance on any exchange, hold long-term coins in a wallet you control and spread larger sums across platforms. See how to keep crypto safe, crypto risk management basics and what happens to crypto if an exchange goes bankrupt.
Frequently asked questions
How do I verify crypto proof of reserves?
Open your exchange's proof of reserves page, copy your record ID or Merkle leaf and check it in the verifier. Then read the reserve ratio for each coin you hold.
What is proof of reserves in crypto?
A check that an exchange holds at least as much of each covered coin as customers are owed on one date.
What does a 100% reserve ratio mean?
The exchange held one coin for every coin owed on snapshot day. Above 100% is a cushion. Below 100% is a shortfall.
Is proof of reserves the same as an audit?
No. The PCAOB says PoR reports are not audits and give no meaningful assurance.
Can I check Binance's proof of reserves after the hack?
Yes. Its October 31 snapshot is on its PoR site. The full proof for checking your own balance is estimated by November 3, 2026.
Why doesn't my proof of reserves balance match my account?
The report shows your balance at snapshot time. Trades since then change your live balance only.
How often should an exchange publish proof of reserves?
Monthly is common. A long unbroken record matters more than any one report.
The bottom line
Proof of reserves turns "trust us" into something you can check. Confirm your balance is in the tree, read the ratio and note who signed off. Then remember its limits: one day, no debts and no security guarantee. If you want structured guidance on investing and trading digital assets the simple way with AI on your side, explore our CCF programs.
This article is general education, not financial, tax or legal advice. Details of the Binance incident and its proof of reserves were still developing as of November 1, 2026, so confirm the latest with official sources. Trading and investing in digital assets involves risk including loss of your capital.
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Written by
CCF · Co-founder
Teaches trading and investing built on risk management, with AI to sharpen each decision. He lives by the power of 1%: small consistent daily effort makes you the person you want to be.
CCF · Co-founder
Has been in crypto since 2017 and helps people learn investing and trading through structured practical education built on risk management so they can decide with confidence and grow steadily.
Educational content only. This article is general education about digital assets, trading and investing. It is not individualized financial, investment, legal or tax advice, and it is not a recommendation to buy or sell any asset. Crypto markets are volatile and involve risk, including loss of principal; leveraged products can lose more than the amount committed. CCF does not guarantee any outcome or return. Do your own research and consider speaking with a licensed professional about your situation.
