The crypto industry is facing increased scrutiny from regulators following a number of high-profile security breaches and scandals at crypto exchanges. One of the most notable examples is the collapse of FTX, an exchange that allegedly misused client assets, resulting in significant financial losses for many of its users. This event has raised concerns about the security and compliance of crypto exchanges, and regulators in the European Union (EU), the United Kingdom (UK), and other jurisdictions are now considering new rules to rein in the industry.
In light of this regulatory pressure, crypto companies are taking steps to ensure compliance and maintain user trust. Leading crypto derivatives trading platform Bitget is one such company that has introduced a range of measures to mitigate risk and increase transparency.
One of the most significant measures that Bitget has implemented is the creation of a $300 million auditable protection fund. This fund, which is largely made up of Bitcoin, serves to safeguard against hacks, theft, and other threats to the stored assets on the platform. The company has pledged that the funds in the protection fund will remain untouched for at least three years and maintains publicly accessible wallet addresses. This measure is designed to increase users’ confidence in the platform and reassure both users and regulators.
In addition to the protection fund, Bitget has also introduced a Fund Custody service. This service, which was launched in January 2023, enables users holding assets worth over 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 check and withdraw funds separated from the main reserve. The aim of this service is to ensure that users’ funds aren’t affected in the event of a hack or a run on the exchange.
Bitget has also committed to increasing transparency by publishing its Merkle Tree proof of reserves. Proof of reserves (PoR) is a method of verifying that a full-reserved trading platform has the 1:1 reserve ratio backing it promises, across the digital assets it holds in custody on behalf of its customers. A Merkle Tree is a data structure commonly used to securely encode blockchain data, which can also be employed by a third party to audit, verify, and authenticate user holdings. Users can verify their own account’s proof of reserves via an open-source auditing tool, “Merklevalidator,” on the website and on GitHub.
To ensure the security of users’ funds, Bitget also uses hot and cold wallets together with industry-grade protection and Zero Trust Security Architecture. A hot wallet refers to a digital wallet that is connected to the internet, while a cold wallet refers to a digital wallet that is offline. By using both hot and cold wallets, Bitget is able to provide an added layer of security for users’ assets. Additionally, the platform uses Zero Trust Security Architecture, which is a security framework that assumes that all network nodes and users are untrusted until proven otherwise. This approach helps to protect against potential threats, such as malicious actors trying to gain access to the platform’s assets.
In conclusion, the recent fall from grace of FTX and other crypto exchanges has shaken the industry and increased regulatory pressure on crypto companies. Bitget, a leading crypto derivatives trading platform, has taken a proactive approach to address these concerns by introducing a range of measures to mitigate risk and increase transparency. These measures include a $300 million auditable protection fund, a Fund Custody service, and publishing its Merkle Tree proof of reserves. Additionally, Bitget uses hot and cold wallets and Zero Trust Security Architecture to ensure that users’ funds are securely stored on the platform. As regulatory pressure continues to increase, it is important for crypto