Audits and Reports

Audits and Reports

Proof of Reserves & Solvency Audits

We offer “Proof of Reserves” audits for cryptocurrency exchanges, cryptocurrency funds, and other custodial services wanting to increase trust placed in them by their customers, regulators, and business partners such as financial institutions.

These audits help test whether or not a company is solvent, having enough customer assets to account for liabilities. They also help determine how susceptible a custodial service is to a security breach, particularly those that could result in the loss of customer funds, whether via a hack, social engineering attack, an internal breach, and a variety of other threat vectors. Thus, improved security measures can be taken to prevent a breach.

In our blog article The Case for Proactive Solvency and Security Audits, we discuss two general approaches that can be taken; a merkle-tree based Proof of Reserves approach, or the trusted third party audit approach (also sometimes referred to as the attestation-based approach). As we describe, both approaches have their pros and cons that are worth carefully considering. CipherBlade helps exchanges with both types of approaches.

As the blockchain industry continues to mature, this level of transparency will be at a minimum a public expectation – and quite possibly a regulatory one.

Proof of Reserves & Solvency Audits

Case Study

We have conducted a “Proof of Reserve and Security Audit” for Canadian exchange BitBuy and authored a report which is now featured on the BitBuy homepage.

Our suite of capabilities and resources includes Chainalysis certification, Crypto Defenders Alliance membership, an extensive network of law enforcement, legal and exchange contacts, and most importantly, deep experience with dozens of cases.

Audits and Reports

Funds Audit for Investment Firms

CipherBlade conducts various types of audits for Investment firms and financial institutions. Such audits may include verifying the existence and control of purported cryptocurrency assets the investment firm holds, and assessing the value of such assets.

Sometimes we are asked to analyze and assess if there is any suspicious or untoward activity that has occurred on the part of the investment firm, or also whether the source of funds provided by applicable investors is legitimate as part of a Source of Funds Analysis.

Case Study: We were approached by a prominent blockchain company after they had experienced a data breach and a targeted “FUD” campaign against their business. To rebuild the trust of their business partners, they engaged us for performing a security audit and authoring a report.

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    CipherBlade LLC
    301 Grant Street, Suite 270
    Pittsburgh, PA 15219