The world’s biggest crypto exchange by volume is addressing publicly what it claims was an error in processing client funds.
According to a recent Bloomberg story, Binance admitted that it held client cash and collateral for Binance-issued tokens in the same wallet.
Binance stores reserves for the Binance-peg tokens (B-tokens) the company releases in a digital wallet designated “Binance 8.” Binance 8 also keeps client funds, according to a listing on Binance’s website. The wallet’s reserves are also substantially more than the number of B-tokens issued by Binance, indicating that the collateral is not stored separately from client assets but rather is mixed in with them.
In addition, the Binance spokesman said that despite the error, client assets have been and will continue to be retained on a one-to-one basis.
Last week, ChainArgos, a blockchain analytics company, was the first to uncover Binance’s B-token problem. According to Jonathan Reiter, the co-founder of the company, the Binance 8 wallet displayed a “clear mixing of client and peg-backing funds.”
Since the collapse of FTX, which is believed to have badly mismanaged client assets in a manner that may be illegal, crypto exchange transparency has been a particularly hot subject.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.