I don't know, it looks like a half-baked idea, like everything surrounding crypto-currencies. Someone probably came up with this proof of reserves idea, and everybody else said yeah let's do this, because it sounded like it does what they wanted to do, except it doesn't.
Yeah, the original Proof of Reserves proposals (and this is probably a decade ago, on the bitcointalk forum) was a merkle scheme IIRC in which each user could verify that their amounts were added into the proven total.
Most people seem to be just using "prove you hold some amount" which is a very poor cousin. However, it is pretty clear that FTX would have failed even that, so maybe we should lower our expectations?