Binance ‘Made A Mistake’ By Mixing Customer Funds With Collateral Assets: What Investors Need To Know

Binance (CRYPTO: BNB), the largest cryptocurrency exchange in the world, made a mistake by keeping cryptocurrencies that are used as collateral for some of its crypto assets in the same wallet as funds belonging to its customers, Bloomberg reported, citing an official Binance spokesperson.

Binance (CRYPTO: BNB), the largest cryptocurrency exchange in the world, made a mistake by keeping cryptocurrencies that are used as collateral for some of its crypto assets in the same wallet as funds belonging to its customers, Bloomberg reported, citing an official Binance spokesperson.

The exchange issues a total of 94 Binance-peg tokens (B-Tokens) and the reserves for almost half of them are stored in a cold wallet called Binance 8.

However, the wallet contains more tokens than what is required for the amount of B-Tokens issued. This indicates that the collateral assets were mixed with customers’ tokens, according to Bloomberg.

Also read: Bitcoin’s Key Resistance Level At $25,000: Will It Be A Tough Nut To Crack — Or A New Cycle Trigger?

The Binance spokesperson told Bloomberg, “We made a mistake by moving collateral assets into this wallet and referencing it on the B-Token Proof of Collateral page.”

“We are currently in the process of transferring these assets to dedicated collateral wallets.”

The exchange spokesperson also added that “All assets held with us have been and continue to be backed 1:1.”

Binance faced scrutiny following the collapse of cryptocurrency exchange FTX.

To restore confidence, Binance released a “proof of reserves” report from accounting firm Mazars in December, which showed that Binance’s customer Bitcoin (CRYPTO: BTC) reserves are overcollateralized.

Next: FTX Co-Founder’s $3.28 Million Washington D.C. Townhome Hits The Market As Feds Seize $700M In Assets

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