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Proof of reserves
A proof of reserves tries to show that an exchange holds assets. It is a snapshot, not a full audit, and it often says little about what the firm owes.
What it can show
It can show control of some wallets at a moment in time. Sometimes customers can check that their account was included in a list of liabilities.
What it cannot show
It may ignore debts, loans, and related companies. Assets can be borrowed for the photo and returned the next day. A report with no liabilities is an advert.
Read who wrote it, what date it covers, and whether debts are in the same document.
Check yourself
Does a reserves report prove you can withdraw tomorrow?
No. It is a snapshot, and it may omit debts.
After this you can refuse a reserves badge that does not also show what the firm owes.
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