Gate boasts 104% cold reserve coverage, but separate snapshot dates raise red flags
Crypto exchange Gate has introduced Proof of Security, a disclosure framework showing 104.58% cold-storage coverage for customer balances, but the methodology uses different snapshot dates, raising verification concerns.
The exchange announced its new framework on Nov. 5, claiming that cold assets would cover customer balances even if it lost all hot-wallet assets. However, the reported 104.58% figure compares asset shares from different snapshots rather than establishing cold assets and customer balances on a single common date.
Gate's methodology compares an 88.26% cold-storage share with an 84.39% user-asset share. The snapshots have different totals and don't account for intervening price changes or fund movements, leaving a gap in demonstrating common-date coverage.
Different measurement bases
The exchange's Proof of Security framework measures cold assets against total assets in one snapshot, while user assets are measured against platform reserves in a separate Proof of Reserves snapshot. This approach cannot establish insolvency or losses by itself.
The reported 104.58% share comparison alone cannot establish backing at one common date.
Gate's previous disclosure from Oct. 21 reported $8.7 billion in reserves and $7.3 billion in user net assets as of Oct. 18, with a 118.49% overall reserve ratio. However, these October figures cannot be combined with November percentages to present a measured dollar buffer.
Verification pending
As of Nov. 5, independent third-party verification of Gate's claims is still in progress. The review covers asset authenticity, control, valuation, reporting scope, and the coverage calculation. Individual wallet addresses are currently withheld for security reasons.
This new framework should be distinguished from an older audit by Hacken dated Jan. 3, 2024, which examined code, architecture, and vulnerabilities rather than current asset holdings. The decisive next evidence needed is a common-date reconciliation of cold assets and customer balances with transparent valuation methods.
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