Home CryptocurrencyBitcoin Binance “accidentally” holds token collateral and user funds in the same wallet

Binance “accidentally” holds token collateral and user funds in the same wallet

by SuperiorInvest

Major cryptocurrency exchange Binance has reportedly admitted to mistakenly depositing some customer funds in the same wallet as its collateral for some in-house tokens. After the disclosure, Binance began the process of transferring the relevant assets to dedicated wallets with collateral.

Binance mistakenly posted collateral for some Binance-mined tokens, or B-tokens, to a wallet that also holds customer assets, Bloomberg reported is John 24.

Binance on Monday released proof of collateral for B-Tokens, providing information on all 94 tokens issued by Binance. Company before he emphasized that B-tokens are always fully secured and 1:1 secured.

According to the proof of collateral, Binance’s reserves for nearly 50% of all B-tokens are currently held in a single wallet called “Binance 8”. Wallet holding significantly more tokens in reserve than required for the amount of B-tokens that Binance has issued. This allegedly suggests that Binance combined collateral with client coins rather than storing these assets separately.

Despite the B-token-only issue, such a wallet management system would clearly contradict Binance’s own wallet guidelines.

According to Binance’s Proof of Reserve (PoR) page, the exchange’s corporate holdings are recorded on separate accounts and do not form part of the calculation of proving reserves. Binance stated:

“When a user deposits one bitcoin, Binance’s reserves are increased by at least one bitcoin to ensure that the client’s funds are fully covered. It is important to note that this does not include Binance’s corporate holdings, which are kept on a completely separate ledger.”

According to Bloomberg, Binance has admitted to accidentally storing B-tokens mixed with its own reserves and is doing its best to fix the problem soon.

Related: Listing of tokens after listing on Binance raises suspicions of insider trading

“Binance is aware of this error and is in the process of transferring these assets to dedicated wallets with collateral,” a Binance spokesperson reportedly said. The representative also noted that Binance 8 is an exchange wallet and added that collateral was previously moved to this wallet by mistake.

Binance did not immediately respond to Cointelegraph’s request for comment.

As previously reported, Binance has launched the PoR process in late November to gain more public confidence amid the failure of the FTX crypto exchange. In early December, the exchange scored partnership with accounting firm Mazars as its official PoR auditor.

Soon after confirming that Binance Bitcoin (BTC) were fully securedMazars rremoved Binance’s PoR audits from its website without providing any explanation.

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