Arthur Hayes Calls BitMEX Funds “SAFU” Due To This New Feature

BitMEX founder and ex-CEO, Arthur Hayes, took to Twitter on Thursday to announce that the funds on the exchange were completely safe. And, this was due to the release of their full-fledged roof-of-liability system. Using this, users could verify their individual liability on the crypto exchange’s total liability balance.

BitMEX Reveals Proof Of Liabilities

As per BitMEX’s official announcement, the self-verification process can be conducted on your own and does not require a third-party auditor. Talking about client privacy, BitMEX pointed out that user privacy is their utmost concern.

[1/4] BitMEX’s PoL System Now Live & Operational

All BitMEX depositors can now verify their individual liability is included in the total exchange liability balance. This self verification process can be conducted without a third party auditor.https://t.co/1z5MJ2nlVK

— BitMEX Research (@BitMEXResearch) December 1, 2022

And in order to preserve user privacy, account balances are randomly split into multiple leaves of the Merkle tree and not stored under one single roof. Reserve and Liability snapshots will be published twice a week on Tuesdays and Thursdays.

The official announcement further stated that,

“This PoL system is not a quick panicked reaction to the failure of FTX. The system is genuinely innovative and groundbreaking. It is the first system where every user can verify for themselves that their balance is included in the total, without breaching customer privacy.”

Push For Transparency

In accordance with FTX’s bankruptcy proceedings, it was uncovered that the crypto exchange had loaned out a large portion of its customer’s assets, keeping it hidden from the public knowledge.

As a direct result of this, well-known crypto exchanges have been frantically trying to reassure users about their proof-of-reserves in order to promote transparency in the market.

Read More: Crypto Exchanges Rush To Provide Proof-of-Reserves Following FTX Crisis

Concerns Raised On PoR Systems

However, this strategy has met with its share of criticism, as Kraken’s CEO, Jesse Powell points out that, exchanges publishing their reserve balances are “pointless”.

The Kraken CEO stated that the whole point of coming out transparent was to understand whether a crypto exchange had more crypto in its custody than what it owed to its clients.

Read More: Kraken CEO Calls Binance ‘Proof Of Reserves’ Pointless