Regulators sharpened their pencils after the dramatic fall from grace of crypto exchange FTX. Its alleged misuse of customer assets left up to a million users out of pocket and the aftermath rocked the industry.
New rules to curb crypto exchanges are already on the cards in the European Union (EU), the UK and beyond. For smart crypto exchange operators, user trust and security, as well as their own compliance, are now firmly in mind.
Maintaining the trust of its eight million users and attracting new ones is behind the extensive risk mitigation measures introduced by the leading crypto derivatives trading platform bitgetto enhance compliance and transparency.
It has deployed a verifiable protection fund of $300 million – a rarity in the industry – along with evidence of reserves and a Custodian of funds service, with the aim of reassuring both users and regulators.
Transparency and trust
Bitget is based in the financial hub of Singapore and launched in 2018, with features and innovations including social and spot trading. It has an average daily trading volume of $10 billion.
The platform protection fund is largely composed of Bitcoin (BTC), with smaller amounts of Ethereum (ETH) and USDT. The funds are used to protect against hacks, theft and other threats to the assets stored on the platform, and Bitget has pledged that they will remain intact for at least three years and maintain wallet addresses accessible to the public.
The fund was recently beefed up, with the total now standing at $300 million, and stored across seven wallet addresses are public to increase transparency.
The measure is designed “to increase our users’ trust in us,” Bitget chief executive Gracy Chen said. talking to TOKEN2049 in November.
Bitget’s Fund Custody service, launched in January 2023, allows users holding assets worth more than 100,000 USDT on the platform (including spot, futures, Bitget Earn, fiat currency and leverage) to receive a separate custodial wallet with its own dedicated address to verify and withdraw separate funds from the main reserve.
The goal is to ensure that user funds are not affected in the event of a hack or run on the exchange.
Chen also reiterated Bitget’s commitment to “be more transparent.” She described the transparency measures taken by the CEX, including the publication of its Merkle Tree proof of reservations with the aim of “promoting full transparency and comprehensive auditing of assets”.
Evidence of reserves (PoR) is, essentially, a method of verifying that a fully reserved trading platform has the 1:1 reserve ratio it promises, across all of the digital assets it holds in custody for the account. of its customers.
Meanwhile, a Merkle tree – a data structure used in computing and commonly used to securely encode blockchain data – can also be used by a third party to audit, verify and authenticate user holdings.
Users can verify proof of reservations in their own account via an open-source audit tool, “Merklevalidator”, on the website and on GitHub, and the enhanced transparency and compliance measures that have been introduced are designed to work. the concert.
The platform uses hot and cold wallets as well as industry-grade protection and Zero Trust security architecture to ensure user funds are stored securely on the platform.
A multi-faceted approach
Introducing proof of reserves (POR) is becoming a common measure taken by exchanges and trading platforms to reassure users. But, in the absence of other transparency or confidence initiatives, market doubts may remain.
Thus, Bitget’s proactive approach to launching its combination initiatives should, it hopes, serve more to allay concerns that user funds are well protected.
The platform also launched a $5 Million Builders Fund which seeks to support affiliates whose livelihoods have been affected by the collapse of FTX.
Celebrity endorsement still has a place in crypto, and Bitget’s ambassador is none other than legendary footballer Lionel Messi. His take: “It’s reassuring to see Bitget take this seriously with a series of protection initiatives.”
Article sponsored by bitget
This sponsored post was created by Decrypt Studio. Learn more on the partnership with Decrypt Studio.
Stay up to date with crypto news, get daily updates in your inbox.