The two sides of the claim
Proof of Reserves (PoR) usually starts with a dated snapshot: which customer assets an exchange says it holds, and what it owes customers in the assets covered by the report. Compare like with like—BTC reserves with BTC customer balances, not a blended dollar headline.
What a Merkle proof verifies
A Merkle tree lets a customer check that their balance was included in a published set without exposing every other account. Inclusion is useful, but your proof alone cannot show that every customer was included or that off-chain obligations were counted. Read the stated scope and the independent reviewer’s work.
Read a coverage ratio
The simple ratio is eligible assets ÷ included customer liabilities. A reported 120% means 120 units of assets for 100 units of included claims at that snapshot. It does not establish that all assets are free of liens, that no debts sit outside the report, or that the same position exists tomorrow.
A hypothetical coverage test
Change only the pledged amount. The figures below illustrate the arithmetic; they are not data about any exchange.
How to read this comparison
The first bar divides all reported assets by included claims. The second subtracts the hypothetical pledged amount first. If pledged assets are unknown, the second figure cannot be measured from a PoR report alone.
Example only: 120 asset units and 100 client claim units. A pledge is a hypothetical constraint; whether any real assets are pledged requires separate evidence.The missing questions
A snapshot can miss changes between dates. It may not identify borrowed coins, pledged assets, excluded products, lost keys, or all corporate liabilities. Kraken describes several of these limits in its own methodology. PCAOB warns that PoR reports are not financial statement audits; the precise procedures and assurance vary.
An eight-check workflow
- 01Find the exact snapshot date and publication date.
- 02List included coins, networks, products and legal entities.
- 03Compare reserves with customer liabilities for each asset.
- 04Verify your own balance in the Merkle tree, if offered.
- 05Check how wallet control was established and whether assets are encumbered.
- 06Read the reviewer’s name, scope and actual conclusion.
- 07Look for full financial statements and other material obligations.
- 08Repeat the check after new reports; one snapshot is not ongoing proof.
Primary sources
Research note: methods and report scope differ across exchanges. This page does not rate any platform or verify its current solvency.