Kraken's proof-of-reserves audits are looking more and more attractive and important these days!
https://blog.kraken.com/post/15002/kraken-proof-of-reserves-...
https://blog.kraken.com/post/15002/kraken-proof-of-reserves-...
That said, I don't think it's fair to say "nothing" in a situation where holding the keys means having control of the coins.
FTX's problem wasn't that they had liabilities. It was that they didn't have cryptographic custody of the assets they claimed to have. They don't have the ability to make a case in court that the funds they held belong to customers and, thus, should not be considered assets that could be given to their creditors, because they don't have the assets at all.
Kraken not only can prove that they have all the customer funds in the audited currencies, but also which account they belong to.
If individual accountholders can prove Kraken holds not just "all customer coins" but "my specific account's coins," Kraken can also make that case in court.
Whether it holds up is obviously not guaranteed, but that's not "nothing" compared to FTX's situation.
> None of the Digital Assets in your Kraken Account are the property of Payward. Payward does not represent or treat assets in your Kraken Account as belonging to Payward. However, a court may disagree with Payward’s treatment of your assets and subject them to claims of Payward’s creditors.
This will be tested in court. Kraken's liabilities matter.
What I also said is that proof of reserves is not nothing.
Kraken has proven they do have your coins. FTX did not.
This does not mean Kraken is invulnerable. It's just not vulnerable to the vulnerability that killed FTX.
FTX could have borrowed using these assets as collateral, and the result would have been very similar, but FTX could have posted a proof of reserves.
You're right that the court would have had more freedom to act, though.
In any case, the news about the supposed hack may make the argument moot.
the point of crypto is the ability to self custody without intermediary and verify funds are sound on-chain
non-custodial defi solves many of these issues
I look forward to the day defi fixes this, but right now, and especially with the difficulty of fiat on-ramps to defi, I think the balance comes down in favor of trading on a reliable CEX and never holding funds on an exchange that you aren't actively trading.