Bullish plans proof of reserves on Midnight: proving solvency without showing the books

Bullish, the NYSE-listed company behind the institutional crypto exchange of the same name, plans to build a proof of reserves on Midnight, the privacy-focused blockchain built alongside Cardano. The idea is simple to state and hard to do well: show the world that the exchange holds enough assets to cover what it owes its customers, without publishing its wallets, its counterparties or its customers' balances.

The plan was announced on 17 March 2026, when Midnight named Bullish and Worldpay as new members of the small group of companies that run its network. Six months on, there is still no launch date. This post explains what a proof of reserves is, what Midnight would add, what such a proof can and cannot tell you, and what the plan means for Midnight.

What was announced

Midnight's announcement says Bullish "will build Proof of Reserves on Midnight's zero-knowledge layer": an application that lets an exchange verify its solvency cryptographically while keeping wallet addresses, counterparties and transaction histories private. Both Bullish and Worldpay are to build proof-of-concept applications on Midnight. Worldpay's is about stablecoin payments for merchants.

Chris Tyrer, President of Bullish Exchange, framed it this way: "'Don't trust, verify' has been a founding principle of digital asset markets, and Midnight's zero-knowledge architecture allows us to act on that without compromising confidentiality." Building the proof on Midnight, he said, would give "cryptographic verification of solvency that satisfies the rigorous standards institutional markets demand, without exposing sensitive underlying data that our customers expect us to protect."

Bullish also helps run the network itself. It is one of the nine federated partners that have produced Midnight's blocks since the network's genesis on 30 March 2026, alongside Google Cloud, Worldpay, MoneyGram, eToro and others.

Who Bullish is

Bullish operates a regulated spot and derivatives exchange aimed at institutions, licensed in Germany, Hong Kong and Gibraltar. Its shares began trading on the New York Stock Exchange on 13 August 2025 under the ticker BLSH. It also owns CoinDesk, the crypto news and data company it bought in 2023. We could not find a public proof-of-reserves page on Bullish's own website today.

How proof of reserves works

A crypto exchange holds its customers' coins. The question every customer has, and the one that came into sharp focus after FTX collapsed in November 2022, is whether those coins are all still there. A proof of reserves tries to answer it with cryptography instead of a promise. It has two halves.

The assets. The exchange shows that it controls wallets holding a certain amount of each asset, usually by signing a message with the keys to those wallets or by moving funds on-chain.

The liabilities. The exchange shows how much it owes, which is the sum of all customer balances. The classic tool is a Merkle sum tree: every customer balance becomes a leaf, the leaves are hashed and added together in pairs up to a single root, and the root carries the total. Each customer can then check that their own balance is included in that total, without seeing anyone else's.

If assets are at least as large as liabilities, the exchange can pay everyone back, at least on the day of the check.

What zero-knowledge proofs add

Plain Merkle trees leak information. They can reveal the number of customers, the size of large accounts, and the wallets the exchange uses. They also leave a loophole: a fake account with a negative balance would quietly lower the total an exchange appears to owe.

A zero-knowledge proof (a short cryptographic proof that a calculation was done correctly, without showing its inputs) closes both gaps. As Ethereum co-founder Vitalik Buterin described in 2022, the exchange can prove that every balance is zero or positive and that the balances add up to the stated total, without revealing a single account. Security firm OtterSec describes the same two checks as the core of a ZK-based proof of reserves: liabilities equal the sum of all balances, and every balance is positive.

What Midnight would add

Midnight is built around exactly this kind of split. On Midnight, a contract's data is divided into a public part, stored on the chain, and a private part that stays with its owner. A zero-knowledge proof connects the two, so the network can check that the rules were followed without seeing the private data. Midnight calls the ability to reveal only what is needed, to whoever needs it, selective disclosure.

For a proof of reserves, that suggests a set-up where the result (assets cover liabilities) is public and checkable on the chain, while wallet addresses, counterparties and individual balances stay private, and could be shown to a specific party, such as an auditor or regulator, if needed. Bullish has not published how its version will work. What is described here is what Midnight's model is designed to allow, not a confirmed design.

What a proof of reserves can't tell you

Even a well-built proof of reserves has limits, and the people who designed the technique are open about them.

• It is a snapshot. It shows solvency at one moment. It cannot prove the funds are not lost, lent out or misused the next day. Buterin's own summary: an exchange that can recover customers' funds for good reasons also has the power to take them for bad ones.
• Assets can be borrowed for the photo. An exchange could temporarily borrow coins to look solvent on the day of the check.
• Off-chain debts don't show up. A proof covers the liabilities the exchange puts into it. Loans or obligations kept off the books are outside it, and OtterSec notes that no proof can guarantee every user was included.
• Cash can't be proven this way. Bank deposits and other fiat holdings can't be verified cryptographically. They still depend on auditors and regulators.

A privacy-preserving proof doesn't fix these limits. Its value is that an institution can publish more often, and with more confidence, without handing competitors and attackers a map of its wallets and clients.

When to expect it

No date has been given. Midnight's March announcement describes the work as a plan and, together with Worldpay's, as proof-of-concept applications. We found no update since: Bullish did not mention Midnight or proof of reserves on its second-quarter earnings call on 13 August 2026, and Midnight's September network update does not mention it.

Some of the groundwork has moved on. Midnight has since opened its mainnet so that anyone can deploy smart contracts without first passing a security review on its test network, which removes one hurdle for applications like this one. Until Bullish or Midnight names a date, any timeline is a guess.

What it means for Midnight

For Midnight, the plan matters more as a signal than as a feature.

It is a clear use case. Most privacy-chain pitches are abstract. "Prove you are solvent without showing your books" is concrete, easy to explain, and something regulators and institutional clients already ask for. It is the same split Midnight is built around: private data, public proof.

It comes from an operator, not a spectator. Bullish already runs part of Midnight's network. A proof of reserves from one of its own block producers would be a first sign that the companies securing the chain also want to build on it.

It is still a plan. Midnight is six months old, its blocks are still produced by nine federated partners, and contracts on it cannot yet call each other. A proof of reserves from a regulated, listed exchange would be one of the first real institutional applications on the network. Until it ships, it is an announcement, not adoption.