Binance, the world’s biggest cryptocurrency exchange by trading volume, admitted to storing by “mistake” customers’ funds and the collateral of some of the tokens it issues.
According to Bloomberg, Binance issues 94 Binance-peg tokens, also called ‘B-Tokens’. However, almost half of the reserves of these tokens are kept together with customers’ funds in a cold wallet called ‘Binance 8,' the outlet said. The wallet’s tokens reserve currently outnumber the volume of B-Tokens the leading crypto exchange has issued, Bloomberg also said in a report.
Furthermore, the outlet said its calculation shows that over $539 million in B-Tokens have been affected as a result of the mixing. However, a spokesperson who spoke to the news platform assured that users funds are backed 1:1 and added that the exchange is taking steps to rectify the situation.
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CEXs Battle User Confidence Post FTX
The new development at Binance comes as centralized exchanges face greater scrutiny following the November collapse of Bahamas-based cryptocurrency exchange, FTX, which allegedly released customers' funds to sister trading firm, Alameda Research. FTX is still undergoing bankruptcy proceedings in the United States.
Over a month ago, global financial auditor Mazars in a report noted that Binance's reserves for Bitcoin was over-collaterized, standing at 101%, as against the regular 100% or 1:1 asset-to-reserve ratio. Binance first launched its proof-of-reserves (PoR) for BTC in November last year.
Away from Binance, in a bid to assure their users of their financial health, other cryptocurrency exchanges have also announced PoRs for their digital asset holdings. Last week, Seychelles-based crypto exchange OKX released its PoR which shows that the platform is also over-collaterized, with about $7.5 billion in digital asset holding.
Finance Magnates reports that while OKX’s users hold a total of 117,682 BTC , 1,178,993 ETH and 2,955,696,824 USDT, the crypto exchange’s reserve ratio stood at 105% for the first two digital assets and 101% for the stablecoin.
Meanwhile, Singapore-based Crypto.com and another crypto exchange Biget also recently launched their PoRs. The asset-reserve ratios of the major cryptocurrencies on Crypto.com include: BTC (102%), ETH (101%), USDC (102%), USDT (106%), USDT (106%) and XRP (101%). Others are Dogecoin (101%), Shiba Inu (102%), Link (101%) and Mana (102%).This article was written by Solomon Oladipupo at www.financemagnates.com.