Binance Stored Users' Fund with B-Tokens Collateral by ‘Mistake’: Report

Binance, the world’s biggest cryptocurrency exchange by trading volume, admitted to storing customers’ funds and the collateral of some of the tokens it issues by "mistake."

According to Bloomberg, Binance issued 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. Currently, the wallet’s tokens' reserve outnumbers the volume of B-Tokens the leading crypto exchange has issued, Bloomberg added.

Furthermore, the outlet said its calculation shows that over $539 million in B-Tokens have been affected as a result of this action. However, a spokesperson who spoke to the news platform assured the public 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 (CEXs) face greater scrutiny following the collapse in November of Bahamas-based cryptocurrency exchange, FTX, which allegedly released customers' funds to its sister trading firm, Alameda Research. FTX is still undergoing bankruptcy proceedings in the United States.

Over a month ago, the 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 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 holdings.

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 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%).