Major Crypto Exchanges binance Collateral held for some cryptoassets, it is issued in the same wallet in which the customer funds, mistakenly, Bloomberg ReportedQuoting a Binance spokesperson.
On Monday, Binance free A proof-of-collateral report for B-Tokens, which are 94 Binance-minted tokens. However, the report showed that around 50% of all these coins that Binance issued were stored in a wallet called ‘Binance 8’ at that point.
This wallet had more tokens in reserve than was needed for the amount of B-tokens, suggesting that collateral was being mixed with customers’ funds rather than stored separately.
The problem was also found earlier on Jan 17 datafinovation And chainargos co-founder Jonathan Reiter, who Told that some B-Tokens and the highly excessive collateralization of Binance 8 Wallet by Binance showed a “clear mix of client and peg-backing funds”.
Not having separate, dedicated wallets for customer and exchange funds is against the exchange’s own guidelines.
According to Bloomberg, a spokesperson said that,
“‘Binance 8’ is an exchange cold wallet. Collateralized assets were previously erroneously transferred to this wallet and were accordingly referenced on the B-Token Proof of Collateral page.”
The person further said that assets placed with the exchange “have been and will continue to be backed 1:1,” and that,
“Binance is aware of this mistake and is in the process of moving these assets to a dedicated collateralized wallet.”
Bloomberg calculated (based on Binance data from January 20) that Binance issued over $539 million out of 41 B-Tokens that have Binance 8 as their collateralized wallets, while the wallets themselves hold $1.8 billion in associated assets. holds more than In total, Binance holds over $16.5 billion in 8 different cryptocurrencies beyond B-Token.
Meanwhile, Binance was just recently named in connection with another problem: On January 19th, it was identified as a counterparty to a little-known exchange. bitzlatowhich is facing money laundering charges in America. U.S. Department of the Treasury written in a count that Binance was the top receiving counterparty of Bitzlato bitcoin (btc) Between May 2018 and September 2022.
Reuters reported on January 24 that the exchange processed approximately $346 million In bitcoin for Bitzlato, citing data by blockchain research firm Chainalysis,
However, a Binance spokesperson said that it had provided “substantial assistance” to international law enforcement to aid in the investigation of Bitzlato.
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