Binance Admits To Mistakenly Mixing Customer Funds Inside Collateral Wallet!

Binance Admits To Mistakenly Mixing Customer Funds Inside Collateral Wallet! 

According to a recent Bloomberg report, the largest crypto exchange in the world, Binance, has recently acknowledged to having mistakenly handled their customers funds by keeping them within the same wallet that holds their collateral for its Binance-pegged tokens, known as B-Tokens.

Storing Error

During a time when exchange transparency is a big deal to many investors in the community due to the recent collapse of crypto exchange FTX only two months ago, Binance has recently admitted to their own faults and mistakes in handling customer funds.

On Monday, Binance posted their proof-of-reserves, showing that they had stored most of their collateral backing B-tokens in  a cold wallet known as “Binance 8.”

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It was then noticed however, that this wallet contained far more funds than would be required to collateralize the total number of B-Tokens. This indicated that Binance had mixed their collateral in the same wallet containing customer funds.

“‘Binance 8’ is an exchange cold wallet. Collateral assets have previously been moved into this wallet in error and referenced accordingly on the B-Token Proof of Collateral page… Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets.” A spokesperson for Binance told Bloomberg. 

Binance & Proof Of Reserves

Since FTX’s collapse and bankruptcy back in November, many in the public have been calling for crypto exchanges and firms to provide their investors with more transparency. In response to this, Binance has continuously been releasing Proof-of-Reserve reports for the public to assure investors about the exchange’s financial health.

This isn’t the first time Binance’s proof-of-reserve methods have been criticised however. Back in November of 2022, Binance caused some buzz and concern in the community after more than $2 billion in assets were seen to be moved around by Binance’s wallet. Binance CEO Changpeng Zhao (CZ) later on clarified that the movement of this large amount of assets were simply part of Binance’s Proof-of-Reserve audit.

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