Binance Confirms Mixing Funds
Share this article
An editor at Coincrop
26 Jan 2023 | 3 min read
s reported by Bloomberg, Binance, one of the world's largest crypto exchanges, mistakenly kept collateral for some issued digital assets in the same wallet as its customers’ funds.
This past Monday, Binance revealed an illuminating proof-of-collateral report for the 94 Binance-minted tokens known as "B-Tokens". Astonishingly, this official document exposed that almost half of all these coins were held in a single wallet labelled 'Binance 8'.
This wallet contained a significantly higher amount of tokens than the required B-Tokens, implying that customers' funds were being combined with collateral instead of being stored separately.
On January 17, DataFinnovation and ChainArgos co-founder Jonathan Reiter identified an issue with the excessive over-collateralization of some B Tokens and Binance's utilization of their 8 wallet which demonstrated "clear blending between customer money and reserves."
In blatant disregard for its own guidelines, this exchange fails to keep separate wallets designated exclusively for customers and exchange funds.
Bloomberg reported that assets held with the exchange are "backed 1:1", and this is a trend that continues today.
"Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets."
According to Bloomberg calculations based on Binance data from January 20th, the total amount of B-Tokens issued by Binance was a whopping $539 million. Furthermore, the collateral wallet (Binance 8) contains more than $1.8 billion in related assets and an additional sum of over $16.5 billion worth of various crypto assets aside from those associated with the B-Token system.
JonathanAn editor at Coincrop
Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.
CoinLoan combine the best of traditional and novel finance helping you borrow, swap and grow your assets.
Compare over 47,341 CeFi and DeFi products across more than 225 organizations here