Skip to content Skip to sidebar Skip to footer

Binance mistakenly held collateral for tokens in the same wallet as client assets.

Bloomberg reported Tuesday (January 24) which reserves for about half of the B-Tokens that the crypto platform issues were stored in a wallet that also held the assets of customers using its exchange, that company guidelines are to store the collateral separately and that Binance was aware of the error and said it would transfer the assets to other wallets.

The issue of reserve management by crypto platforms has been in the spotlight following the collapse of crypto exchange FTX, which allegedly allowed its sister trading firm Alameda Research to access client funds.

When reserves meant to back B-Tokens on an individual basis are not kept separate from other assets, it is difficult to tell whether the company holds sufficient reserves, according to the report.

Contacted for comment, a Binance spokesperson directed PYMNTS to a Binance blog post published Wednesday, January 18 regarding the company’s transparency regarding individual support for B-Tokens.

In the post, the company said that Binance’s wrapped tokens are always fully collateralized, that there have been times in the past when collateral assets were in the wrong place or not visible to the public, and that users are free to withdraw their assets at any time. time.

At the same time, the company said, its administration of hot wallets “hasn’t always been perfect”, and third parties have spotted it via on-chain data.

“It’s a great example of the inherent transparency of blockchain and how the community works together to build trust,” Binance said. “These issues have been addressed by our team to ensure best practice going forward.”

This report comes two weeks after Bloomberg reported that Binance-Peg BUSD reserves were at three different times missing warranty up to $1 billion.

In a January 10 blog post Writing in response to news reports at the time, Binance said it had always updated assets periodically — not in real time — but was now doing it “much more frequently” to ensure Binance-Peg BUSD is backed by BUSD on a one-to-one basis.

PYMNTS Data: Why Consumers Are Trying Digital Wallets

A PYMNTS study, “New Payment Options: Why Consumers Are Trying Digital Wallets” reveals that 52% of US consumers have tried a new payment method in 2022, and many are choosing to try digital wallets for the first time.

Source link

Leave a comment