Deloitte verifies ICONOMI’s digital assets
UK-incorporated multinational professional services firm Deloitte has performed a Proof of Solvency, a type of blockchain audit, for Ethereum technology-based first worldwide digital asset management platform ICONOMI, making the platform the first crypto firm in the world to have carried out such an audit, according to a press release CoinReport received from ICONOMI’s PR company, Preobrat.
It’s worth mentioning here that a blockchain audit is not any type of financial statement audit. A blockchain audit is a process in which the existence and/or ownership of digital assets is proved using blockchain technology.
ICONOMI’s audit covered all the reserves and liabilities held by the platform on April 5, 2018, the date of the platform snapshot. The Proof of Solvency united the knowledge of Deloitte’s financial industry advisors with their technical distributed ledger expertise to create a best of both worlds approach custom-made to the particulars of distributed ledger firms.
Gorazd Ocvirk, PhD, Director CE Blockchain Innovation Lab of Deloitte, said in the press release we received, “We are pleased that ICONOMI decided to work with us to accomplish the first proof of solvency of a blockchain platform. We are especially proud of the fact that we are the first Big Four company delivering this service. We believe that this service can also become a blueprint for other blockchain companies looking to validate their assets to provide transparency to their investors.”
The first part of the audit centered on liabilities, as ICONOMI says it wanted to assure its users that their account balances on the platform were as reported. To ensure user anonymity, a merkle tree of all user accounts and balances was built while also enabling each user to check their balance on the platform. The audit’s second part covered the proof of reserves, whereby all platform wallets (cold, hot and exchange) and fiat bank accounts were abridged and verified for ownership by means of a signature and transaction process. The final result of the audit confirmed the platform was solvent, user balances were accurate and the reserves cover the liabilities.
ICONOMI says it believes this independent examination will undoubtedly build trust in the crypto-economy altogether, in addition to investor confidence and transparency.
ICONOMI co-founder and CEO Tim M. Zagar said on the occasion, “In an emergent and unregulated environment, we believe that this is a critical step in demonstrating the importance we place in trust, transparency and user security. With little formal regulation in place, it is crucial that those operating within the crypto landscape take it upon themselves to put in place the governance and controls required to ensure a sustainable future for the market. We will continue to build a global company that respects its clients’ and employees’ needs, meets the commitments that were made during our ICO and innovates to deliver an industry-leading service for users. With the audit by Deloitte, ICONOMI has set another milestone, which I believe will become a standard for all other companies in our industry and help us move towards better regulation of the whole market.”
Ocvirk added, “ICONOMI is the first and leading global digital asset management platform. Being a trailblazer in the field of digital asset management also means that ICONOMI’s responsibility towards its users is under more scrutiny compared to their classical and regulated asset management counterparts. As is often the case with the introduction of novel technologies, existing ways of doing things are not applicable, so new approaches are required that are tailored to the technology running the product. We have developed an approach to proof of solvency that takes into account the specifics of blockchain technology, through which we were able to prove that ICONOMI’s reserves are greater than their liabilities, meaning the user and DAA assets displayed on the blockchain platform are as reported and that ICONOMI has in its possession enough reserves to cover these liabilities. The balances of digital assets as shown on the ICONOMI platform for each user reflect the actual balances held by ICONOMI on behalf of its users. The so called ‘blockchain audit’ that Deloitte has performed is not only an important step towards building investor trust, but can also potentially be a first step towards a regulatory framework for crypto-based fund management platforms.”
ICONOMI logo – courtesy of ICONOMI
30 Rockefeller Center photo – David Shankbone (CC BY-SA 3.0)
The first part of the process focused on liabilities. Iconomi said they wanted to assure its users that their account balances on the platform were accurate. A merkle tree of all user accounts and balances was constructed in order to assure user anonymity while also giving each user the possibility to check his balance on the platform. The second part of the PoS covered the proof of reserves, which involved summarizing Iconomi’s wallets as well as fiat bank accounts and testing for ownership using a signature and transaction method.
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