The news:
- Luno, a cryptocurrency company, announced on Wednesday, February 14, 2024, that it will now provide monthly proof-of-reserves reports to its customers to demonstrate that their funds are secure.
- Luno says it is collaborating with Moore Johannesburg, a South African accounting and business firm, to provide monthly reports that include Merkle Tree functionality and monthly verifications to improve reporting transparency.
- The crypto asset custodian and exchange platform stated that this new process will ensure that it keeps all customer digital assets in a 1:1 ratio, implying that each customer’s investments are consistent with the showcased balances in their Luno wallets.
Established in 2013, the Luno cryptocurrency platform serves users in Europe, the US, Africa, and Oceania.
Previously, Luno published quarterly proof of reserves reports prepared by Mazars, a France-based international audit, tax, and advisory firm, between September 2021 and November 2022. The auditing firm also added Binance, KuCoin, and Crypto.com as clients.
Later, some of its cryptocurrency exchange clients claimed in press releases that the accounting firm's reports definitively proved that they were 100% backed. Meanwhile, Mazars maintained that reports were based on agreed-upon procedures (AUP) engagements rather than audits.
Due to these false impressions, Mazars removed the proof-of-reserves reports from its website and abruptly discontinued its services to its crypto exchange clients, including Luno, in December 2022.
Almost a year later, in October 2023, Luno started publishing proof-of-reserve reports again, as prepared by Moore Johannesburg.
While Luno’s current auditing partner also utilises agreed-upon procedures per the International Standard on Related Services (ISRS) standards, it’s augmented with Merkle Tree's proof of reserves.
Meanwhile, Dale Russell, Director of Blockchain and Digital Assets at Moore Johannesburg, says that using the Merkle Tree method to generate proof of reserve reports is the "gold standard of verification" in the industry.
The report is now available to all Luno users via the Merkle Tree verification tool on the Luno website; it is not yet available on the Luno app.
Christo de Wit, Luno South Africa Country Manager, explains that, while there is no legal requirement to publish proof of reserve reports, the cryptocurrency company believes it is a necessary step to instil trust in the crypto space.
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