Proof of Security: Gate wants exchanges to show they can survive a hack

Binance published proof that it held enough crypto to cover its customers, and hackers still took $6.3 billion from it last week. Gate founder and CEO Lin Han now proposes a second test he calls Proof of Security, or PoSEC. It asks whether the coins an exchange keeps offline could repay every customer if the exchange lost its internet-connected hot wallets. Han described the standard in an interview with CoinDesk on 5 November.

How Proof of Security works

Proof of Reserves shows that an exchange holds at least as much as it owes. Han wants exchanges to publish one more number: the cold storage ratio, or how much of customer balances the offline holdings alone cover. He called it “simple arithmetic anyone can check”: if cold storage reaches 100% of user assets, customers stay whole even after a total loss of the hot wallet.

“Proof of Reserves (PoR) shows the assets exist, and PoSEC shows how they’re stored and whether they’re protected,” Han said.

Binance shows the gap between the two tests. It had published proof of reserves, and some of those assets ended up among the stolen funds. It then set aside $6.34 billion to cover its users.

Gate’s own numbers

Gate, which reports more than 60 million users, published its figures first:

• cold storage covers 104.58% of customer assets;
• 88.26% of all assets sit in cold storage and 11.74% in hot wallets;
• total reserves stand at $8.69 billion, or 118.49% of customer assets.

Han said Gate covers its hot wallet exposure with excess reserves, the money it holds above what customers have deposited. He wants other exchanges and regulators to consider the standard, and he stopped short of asking for a legal requirement.

What the test leaves out

Han admitted that PoSEC cannot check how an exchange guards its private keys, passwords and staff access, the places hackers attack most. It also leaves the old trade-off in place: an exchange that keeps less in hot wallets processes withdrawals more slowly. “It doesn’t necessarily eliminate the trade-off. What it does is make it manageable,” Han said.

Part of Gate’s cold storage holds stocks and US Treasuries under independent custody, alongside crypto. An independent audit of the numbers is still under way, so for now you are reading Gate’s own report.

What it means for you

If you keep coins on an exchange, ask two questions: does it publish Proof of Reserves, and what share of your balance sits offline. A ratio above 100% means a hot wallet breach should not touch your deposit, as long as an auditor confirms the number. We tracked how the Binance theft unfolded in our hack timeline, and our guide on wallet protection covers what you can do with your own keys.

Based on CoinDesk’s interview with Lin Han published on 5 November 2026. Gate’s figures are self-reported and await an independent audit.