Binance accidentally mixes reserves of bitcoin ‘B-Tokens’ and customers

Binance accidentally mixes reserves of bitcoin ‘B-Tokens’ and customers
Binance accidentally mixes reserves of bitcoin ‘B-Tokens’ and customers

The world’s largest crypto exchange Binance has come under scrutiny after it emerged that it holds customer funds in the same wallets as the collateral for its so-called “B-Tokens.” Bloomberg reports this based on the Proof of Collateral page.

Bitcoin, Ethereum and XRP on the BNB Chain

B-Tokens, or Binance Tokens, are cryptocurrencies issued by the exchange. They exist on the BNB Chain and represent all sorts of crypto, including bitcoin (BTC), ethereum, and ripple (XRP). In total there are about 94 coins. For every token issued, a real variant of the crypto must be secured. In short, to make 1 BTC available on BNB, 1 real BTC is locked.

Bloomberg has noticed that some of the collateral for these tokens is in the cold wallet “Binance 8” state. This is a wallet that also stores customer credits.

The reserves of about 40 B-Tokens are said to be in this wallet. At the time of writing, they have a combined value of $539 million. Bloomberg reports that this could cause any problems:

“The lack of segregation means it is difficult to track how many coins Binance is holding in reserve to meet potential refund requests for the number of B-Tokens it has made.”

Crypto exchange Binance responds

Binance has since responded to the incident. The transactions that are part of the collateral of the aforementioned tokens would have been accidentally sent to this wallet:

“Binance is aware of this error and is in the process of transferring these assets to dedicated collateral wallets.”

The crypto exchange also emphasizes that, despite this error, all customer credits have always been and still are 1:1 covered.

Binance was previously in the crypto news as part of a major international enforcement action by the US Justice Department. The exchange is said to have processed transactions from another exchange, which has now been shut down due to money laundering. It must be said that Binance helped with this research.

The article is in Dutch

Tags: Binance accidentally mixes reserves bitcoin BTokens customers

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