Binance holds token collateral and user funds on same wallet by ‘mistake’
Major cryptocurrency exchange Binance reportedly admitted that it mistakenly stores some customer funds in the same wallet with its collateral for some in-house tokens. After the revelation, Binance started the process of transferring the assets in question to dedicated collateral wallets.
Binance mistakenly put collateral for some of the Binance-minted tokens, or B-Tokens, in a wallet that also holds customer assets, Bloomberg reported on Jan. 24.
On Monday, Binance released a proof of collateral for B-Tokens, providing information for all 94 tokens issued by Binance. The firm previously stressed that B-Tokens are always fully collateralized and backed 1:1.
According to the proof of collateral, Binance reserves for almost 50% of all B-Tokens are currently stored in a single wallet called “Binance 8.” The wallet holds significantly more tokens in reserve than required for the amount of B-Tokens that Binance has issued. That allegedly suggests that Binance mixed collateral with clients’ coins rather than storing such assets separately.
Despite the matter relating only to B-Tokens, such a wallet management system would apparently contradict Binance's own wallet guidelines.
According to Binance’s proof of reserve (PoR) page, the exchanges' corporate holdings are recorded in separate accounts and do not form part of the proof-of-reserves calculations. Binance stated:
According to Bloomberg, Binance has admitted that it stores B-tokens mixed with its own reserves by mistake and is doing its best to fix the issue soon.
Related: Token dump following Binance listing raises insider trading suspicions
“Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets,” a spokesperson for
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