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The 'Mistake' of Storing Users' Digital Currencies in Collateral Wallets, Admitted by Binance

WikiBit 2023-01-25 17:12

Abstract:By volume, the biggest cryptocurrency exchange in the world is now publicly apologizing for what it claims was a mistake in how it managed customer funds.

The largest cryptocurrency exchange in the globe by volume is now openly correcting what it claims to be an error in how it handled customer assets.

In a recent Bloomberg article, Binance said that it had unintentionally retained customer payments and collateral for tokens it had created in the same wallet.

Binance retains reserves for the tokens it produces, known as Binance-peg tokens (B-tokens), in a digital wallet named “Binance 8,” which also reportedly contains some customer assets, according to a listing on Binance's website. The fact that the wallet's reserves are much more than the quantity of B-tokens that Binance has issued shows that client funds are being combined with the collateral rather than being stored separately.

According to a Binance representative on the subject, “‘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.”

The Binance representative added that despite the oversight, customer funds have indeed been held one one-to-one and still are.

ChainArgos, a blockchain analytics company, became aware of Binance's B-token issue for the first time last week. Jonathan Reiter, a co-founder of the company, claimed that the Binance 8 wallet displayed “clear mixing of client and peg-backing funds.”

Since the bankruptcy of FTX, which is believed to have been massively screwing up customer assets in a manner that may have been illegal, the problem of cryptocurrency exchange transparency has gained a lot of attention.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!



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