The continued impact of the collapse of FTX – exacerbated by the arrest of its founder Sam Bankman-Fried – has intensified calls for greater regulation and transparency in the crypto space. The company’s demise, and the ensuing fallout, have compounded a year of turbulence, as market volatility has significantly impacted the value of investments and consumer trust.
Jack Tan, Co-founder of WOO Network, believes that whilst various solutions have been pursued in a bid to ensure peace of mind for consumers, many fall short when it comes to consumer trust.
Emphasising the urgent need for enhanced transparency, he stated: “Crypto holders want to make sure that the information that they get is always updated, and covers both assets and liabilities. Various solutions have been put forward after the FTX collapse, but many solutions including proof of reserves fall short of establishing consumer trust.
“In a proactive response to calls for greater transparency among digital assets exchanges, we launched a real-time reporting of its assets and liabilities – the first in this industry. WOO Network’s transparency dashboard, WOO X, includes live data reporting that updates every 15 mins, proof of assets and where they are held, information on liabilities, and additional information related to transparency.”
Tan went on to outline the importance of proof of reserves, something that WOO X research revealed only a few companies have. Live data, he said, is another potential builder of trust between consumers and operators in the crypto space.
Mapping out the role proof of reserves can play and why they can be so crucial in bolstering trust for consumers, he insists that they add an extra level of security and safeguard to consumer funds.
“To compare, proof of reserves is the equivalent of a bank showing how much capital they have, but not showing how much they owe to clients and to others,” he explained. “Audited records are an important part of the push for greater transparency but have limitations in isolation.
“We believe that the value of the auditors is greater when they can also verify methodologies and identify whether inputs are accurate. As of today, many auditors still lack the knowledge to evaluate cryptocurrency exchanges fully. WOO X is much more than a simple exchange with its ability to aggregate liquidity from top trading venues and provide this liquidity at lower fees, through well-vetted and diversified holdings on other liquidity venues.”
The need for greater trust between crypto and consumers is becoming increasingly evident as the case of Bankman-Fried and FTX rumbles on, with the FTX founder being arrested in the Bahamas this morning while on the verge of providing testimony to the US court. The arrest is only likely to deepen consumer hesitancy when it comes to potentially entering crypto space.
Bankman-Fried had previously stated that he was willing to testify in US court, with Reuters obtaining access to a first draft of the testimony, in which he was critical of the Chapter 11 team and its approach to the bankruptcy.
The former FTX chief allegedly accused the Chapter 11 team of holding data hostage, as he expressed regret in ‘giving in to pressure and signing forms that precipitated the Chapter 11 filing’ just a few days after FTX International became potentially insolvent.