Updated Nov 5, 2026, 10:00 a.m. EST Published Nov 5, 2026, 9:21 a.m. EST
2 min read
Summary
- Gate is introducing Proof of Security, a standard measuring whether assets held offline could cover all customer balances if an exchange lost its internet-connected wallets.
- Gate says its cold storage covers 104.58 percent of customer assets, with the figures undergoing an independent audit.
- The proposal follows a record cryptocurrency theft at Binance, but it cannot verify internal security controls or eliminate the trade-off between security and fast withdrawals.
Lin Han, the founder and chief executive of Gate, believes a digital asset platform ought to endure the total loss of its online wallets without jeopardizing user capital.
During an interview with CoinDesk, Han explained that the evaluation relies on straightforward mathematics accessible to everyone: when offline storage assets equal or exceed 100% of user holdings, users remain fully protected even if every hot wallet is completely compromised.
Gate is rolling out a fresh framework named Proof of Security (PoSEC), which evaluates whether a trading platform maintains adequate funds offline—separated from web-linked trading infrastructure—to completely satisfy customer liabilities during a security incident.
Gate noted that it had spent a considerable period developing PoSEC as part of its overarching commitment to cybersecurity, and recent exploits made the public rollout timely.
Last week, Binance experienced the biggest crypto heist in history, highlighting the shortcomings of current protective measures. Although that exchange had previously demonstrated that it possessed enough cryptocurrency to back client balances, a portion of those funds was ultimately stolen. Days after the incident, the platform confirmed it had allocated $6.34 billion to reimburse affected users.
Han pointed out that while Proof of Reserves confirms the existence of assets, Proof of Security demonstrates how those funds are stored and guarded.
Several leading platforms, including Kraken, Binance, and OKX, already publish attestations confirming they hold adequate funds to back user accounts. Nevertheless, Gate’s innovative framework goes further by assessing whether offline holdings alone can satisfy customer balances should online wallets be breached.
According to Gate, its offline storage ratio sits at 104.58%, with 88.26% of overall assets kept in cold storage and 11.74% maintained in hot wallets. The firm’s most recent disclosed reserves reached $8.69 billion, representing 118.49% of customer holdings.
Han added that an independent audit of these metrics is currently underway. Certain offline assets consist of equities and United States Treasury instruments managed via independent custodianship.
He emphasized that online wallet exposure is fully absorbed by surplus reserves, which represent funds held in excess of total user liabilities.
The introduction of this new security benchmark follows Gate’s recent rebranding around Gate Money, an application that merges digital asset transactions with savings accounts, currency conversion, and debit cards. In an October interview with CoinDesk, Han mentioned that Gate—serving a user base exceeding 60 million—aims to attract individuals who do not typically trade digital assets. He stated their intention to deliver this offering to a broader consumer demographic.
Han conceded that PoSEC cannot independently verify internal passwords, private-key management procedures, or access permissions, which are the vulnerabilities frequently exploited by attackers.
Furthermore, this benchmark does not remove the inherent difficulty of balancing robust security with rapid withdrawal processing.
Han stated that it does not automatically eliminate the trade-off, but rather renders it manageable.
Gate hopes that alternative platforms and regulatory bodies will contemplate implementing PoSEC, although Han refrained from demanding it as a mandatory legal obligation.
He concluded that once these metrics are made public, clients and institutional participants can determine their own comfort levels.
Originally published at https://www.coindesk.com/business/2026/11/05/gate-ceo-says-crypto-exchanges-must-prove-they-can-survive-a-hack-like-binance-s.
