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In the media release about the audit, BTC China said that the unusual structure of their audit was needed because there were no accredited accounting firms in China with experience in auditing bitcoin exchanges, and the handful of foreign firms with such experience lacked licenses for operating in China. The exchange also clarified the scope of the audit, to avoid confusion with cryptographically proven audits, such as the one recently passed by OKCoin.
BTCChina has a very straightforward understanding for 100% reserve: The total amount in users’ accounts is the same with the total amount in cold / hot wallet in the platform database; Users’ assets in the platform [are] complete and safe; The exchange must have the actual figure of bitcoins on the platform the same with what’s shown in users’ accounts. No embezzlement by any [means]. This is 100% reserve!”
The exchange also claimed that simply publishing the relevant hot and cold wallet addresses would not confirm the balances in individual accounts, requiring a per-account, random verification solution to the audit itself. Witnesses were asked to verify data from random users who called a hotline, sent a private message via the popular Weibo social network, or texted via SMS during the audit process. The audit witnesses were: Huanping Song (author and founder of 8BTC.com), Hongfei Da (co-founder of bitangelsclub.com), Dali (media personality and investor), “Rampaging Prince Gong” (tech personality and author) and Zhi Fu Bao (founder of the Chinese Bitcoin Club).
Only one major Chinese exchange, Huobi, has yet to publish a proof-of-reserve audit, although the company has said that a user-initiated cryptographically verified audit is in the works.
