Once again this year, we would like to sweeten the Advent season for our readers with an Advent calendar. In a slightly different form, each door contains a “knowledge bomb”, which will be supplemented with an extraordinary special prize on Christmas Day. Behind the eighteenth door is the term “proof-of-reserves”. To enter the giveaway on the 24th, simply participate in the polls and like the respective Twitter posts. Proof-of-Reserves The trust of market participants in crypto exchanges and other central crypto service providers has understandably taken a severe hit following the FTX insolvency. Thus, trading venues feel compelled to restore the lost trust through so-called “Proof-of-Reserves”. Proof-of-reserves (PoR) is a transparent auditing practice for cryptocurrency companies that provides an unbiased report on their reserves. Third-party auditors access cryptographic signatures representing the total balance of customer funds and ensure that the custodian of those funds has equal (or greater) reserves to cover all potential customer withdrawals. While the blockchain-verified record of assets is a start to improved transparency, it represents insufficient transparency due to the absence of liabilities to customers. News Crypto exchange Binance reveals $69bn in reserves11. November 2022 Legal & Compliance FTX/Alameda scandal: an elaborate fraud?18. November 2022 News Binance’s proof of reserves leaves questions unanswered14. December 2022 Advent calendar day 18Why do proof-of-reserves not give a complete overview of the financial situation of an exchange? The reserves are fictitious anyway Proof-of-Reserves has no disadvantages Reserves mean nothing without liabilities