Binance Admits To ‘Mistake’ of Storing Its Users’ Crypto Assets Inside Collateral Wallet: Report

The world’s largest crypto exchange by volume is publicly addressing what it says is a mistake in handling customer assets.

According to a new Bloomberg report, Binance said it mistakenly kept collateral for Binance-issued tokens alongside customer funds in the same wallet.

Binance keeps reserves for tokens it issues, called Binance-peg tokens (B-tokens), in a digital wallet labeled “Binance 8.” According to a listing on Binance’s site, Binance 8 also holds some customer assets. The wallet’s reserves are also significantly higher than the number of B-tokens issued by Binance, which suggests that the collateral is being intermingled with customer assets instead of being kept in separate storage.

Says a Binance spokesperson on the issue,

“‘Binance 8’ is an exchange cold wallet. 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.” 

The Binance spokesperson also said that despite the mixup, customer assets have been, and continue to be, held on a one-to-one basis.

Binance’s B-token issue was first noticed last week by ChainArgos, a blockchain analytics firm. According to the firm’s co-founder, Jonathan Reiter, the Binance 8 wallet showed an “obvious mixing of client and peg-backing funds.”

Crypto exchange transparency has been a particularly hot topic since the collapse of FTX, which is alleged to have been grossly mismanaging customer funds in a way that may be criminal.

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Featured Image: Shutterstock/jovan vitanovski

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