inance Holdings Ltd., the world’s largest cryptocurrency exchange, acknowledged it mistakenly stored customer funds in the same wallet holding collateral for its Binance-pegged tokens, known as B-Tokens, according to a Bloomberg report on Tuesday.

On Monday, Binance released a proof-of-reserves for 94 B-Tokens, which are all held in a wallet called “Binance 8.”

This wallet contained significantly more funds than would be required to collateralize the total number of B-Tokens, which indicated additional assets were held in the wallet.

Binance wrote in an email statement to Bloomberg:

“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.”

Earlier this month, it was reported that Binance’s BNB Smart Chain-based BUSD stablecoin was under-collateralized by up to US$1 billion on at least three occasions. The token, otherwise known as Binance-pegged BUSD, is designed to maintain a stable value of US$1 via reserves of another version of BUSD running on the Ethereum blockchain.

Binance has since released updated guidance on how it handles the backing of its tokens. However, the report that customer funds have been mixed with other collateral indicates the company has failed to follow this guidance.

The embarrassing error comes after the failed FTX crypto exchange was accused of “co-mingling” customer funds and using the money for trading in violation of its own rules for protecting client assets.

Binance made a controversial decision in September to convert customers’ holdings of three stablecoins, USDC, Pax Dollar (USDP), and True USD (TUSD), into BUSD, in a move the company said would enhance liquidity and capital efficiency for users.

What are your thoughts on Binance's claims that it inadvertently mixed customer funds with collateral for Binance-issued tokens? Let us know your comments by sharing this article on social media.


Jan 25, 2023
Crypto News

More from 

Crypto News


View All

Join Our Newsletter and Get the Latest
Posts to Your Inbox

No spam ever. Read our Privacy Policy
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.