Gate.io announced a new disclosure framework called Proof of Security (PoSEC) on Nov. 5, asserting that its cold‑storage assets cover customer balances even if its hot‑wallet holdings were lost. The headline figure – 104.58% coverage – is derived from a snapshot of cold assets taken at 00:00 UTC on Nov. 4, compared with a separate Proof of Reserves snapshot that records user balances on a different date.

How the coverage ratio is calculated

According to CryptoSlate, the PoSEC methodology divides the share of assets held in cold storage (88.26%) by the share of user assets recorded in the reserves snapshot (84.39%). The remaining 11.74% of assets sit in hot wallets, while 15.61% are owned by the platform itself. The exchange notes that the two snapshots have different total values, meaning price movements and fund transfers between the dates are not reflected in the ratio.

Limitations and missing data

The primary criticism highlighted by the source is that the calculation does not use a single common‑date reconciliation. A proper test of solvency would compare cold assets and customer balances measured at the same moment, using consistent valuations and reporting perimeters. Gate’s FAQ acknowledges this gap, stating that the snapshots “have different totals” and that the ratio should not be taken as proof of insolvency or loss prevention on its own.

Independent verification and next steps

Gate says an independent third‑party review of its PoSEC claims is underway, but wallet addresses are being withheld for security reasons. The exchange also distinguishes this new framework from its older Proof of Reserves audit, which dates back to a Hacken assessment in early 2024. Until the independent verification is published and a common‑date analysis is provided, the 104% figure remains a headline metric rather than a definitive safety guarantee.

What to watch next

Investors and regulators will likely focus on the forthcoming third‑party report and any updates that align cold‑storage and user‑balance snapshots to a single point in time. Additional scrutiny may arise if Gate’s methodology is compared with emerging industry standards for exchange solvency, especially after recent high‑profile hacks in the sector.