China's Huobi exchange passes proof-of-solvency audit with 103% fund reserves

The final member of China’s “big three” bitcoin exchanges has passed a proof-of-solvency audit with flying colors. In an independent audit published by Ripple Labs CTO Stefan Thomas, Huobi appears to have 103.52% of total customer deposits in reserve. Thomas provided the auditing service free of charge, as he did when auditing Kraken and Bitfinex earlier this year, and OKCoin earlier this month.

Huobi has also included an additional tool for users to confirm that their balances were included in the audit, which may provide the first peak into their planned system to allow users to cryptographically audit the exchange and individual balances at any time. In a statement on Reddit about the audit, Huobi posted “We understand that this kind of audit is not infallible, so Huobi will be taking further steps in the future to ensure even greater transparency and security for users.”

There have been few serious claims that any of the “big three” Chinese exchanges (Huobi, OKCoin and BTC China) were insolvent, the recent audits undertaken by all three should settle many lingering doubts. Thomas noted these cryptographic audits demonstrate little other than total solvency during period of the audit, and that it does not “prove definitively that the bitcoins in question are actually owned by the exchange versus being on loan for instance.” To ensure total financial soundness, these companies would need to undergo a far more extensive and rigorous audit, something that could prove challenging given the lack of any proven auditing organization in the bitcoin world, and any traditional auditing company with experience in cryptocurrencies.