Binance Puts New Reserve Snapshot Under Scrutiny After $6.3B Crypto Hack

Key Takeaways:

• Binance states that assets affected by the hack of $6.3B are covered.
• There is now a new Proof of Reserves snapshot.
• The protection of the zero-knowledge proof is not yet confirmed.

User Score

8.7

Weeks after one of the biggest crypto exchange security incidents in history, Binance has just hit a significant recovery landmark. The exchange says affected assets are now fully covered and has released a fresh reserve snapshot to support its backing claims.

Binance stated it has finished covering assets impacted by the security incident on October 29, leading to stolen funds of about $6.3 billion.

The exchange had invested over $6.34 billion of its own money to offset losses as opposed to passing them along to customers. It was divided into three funding streams: some funds from Secure Asset Fund for Users, or SAFU, the surplus funds from their Futures insurance fund and the Binance corporate treasury.

Binance were then restocking cryptocurrencies both through the regular market and via over-the-counter transactions. Recovery was at 90% by Oct. 31 and 98% on Nov. 4, except for less liquid tokens that took a bit longer.

The company also stated that it will be returning the value of SAFU to nearly $1 billion following a part of its Emergency funding during the process.

Read More: Binance Replenishes 98% of $6.34B Hack Losses, Expands Proof of Reserves to 44 Tokens

Binance has made its new Proof of Reserves snapshot at 00:00 UTC on Nov. 12. The new snapshot expands on the 44 assets added to its snapshot last Nov. 4 to 198 tokens. However, the snapshot is not a complete verification process, but rather a publication.

Given the complexity of creating the complete zero-knowledge proof, Binance estimates that the task will take between 40 and 50 hours.

After the finalization, all affected asset holders will be able to determine whether they had shares in the reserve calculation and find the right level of backing (1:1 and above). The integration of zk-SNARK and Merkle trees in Binance enables users to verify their account balances without revealing the specific amounts of assets held by individual users in a public display.

The reserve update provides another snapshot of how Binance’s reserves look on-chain for Binance users afterward from the hack, but PoR is still not a full valuation of Binance’s finances.

As Binance itself points out, PoR can evidence customer balances and corresponding reserves on a specific date, but it is unable to independently prove solvency or information on all its off-chain obligations.

The U.S. Public Company Accounting Oversight Board has also warned that Proof of Reserves engagements are not the same as financial statement audits and that they might not cover liabilities, borrowed assets, or customer legal rights.

The next big event for Binance users is the full zero-knowledge proof launch; this will make Nov. 12 reserve snapshot verifiable with each user’s time.

Read More: Binance Restores 15 Networks After $6.3B Hack While Outflows Surge to $5.8B

The post Binance Puts New Reserve Snapshot Under Scrutiny After $6.3B Crypto Hack appeared first on CryptoNinjas.