Reportedly Binance is holding the user’s fund in its self collateral wallet and it was because of a mistake.
Binance is a popular crypto exchange, which stands at the first rank in terms of 24 hours Crypto trade volume on its platform. This exchange is known for trusted Crypto trade services & secured custody of the crypto assets.
On 24 Jan 2023, Bloomberg reported that Binance was holding users’ funds under its “Binance 8” wallet. The report also noted that it was a small mistake by the Binance exchange team.
The binance 8 wallet is a specified wallet, in which the exchange stores only those Crypto assets which were issued by the Binance team on the BSC network (Bep20). Report noted that collateral assets in Binance 8 wallet were more than the issued assets on the BSC network, which was clearly showing that some Binance customers’ funds were intermixed with Binance collateral wallet.
A spokesperson from Binance exchange also reportedly talked about this mistake and said that Binance was aware of this mistake & was already working to fix this mistake.
“‘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,” Binance’s Spokesperson added.
Binance Spokesperson also noted that detected mistakes will not impact any customer and also will not impact the Binance Proof-of-reserves (PoR). In short, all the assets on the Binance exchange are backed in 1:1.
In the last couple of months, Binance was dragged by many critics & rival companies over its PoR reporting, after the downfall of the second-ranked Crypto exchange FTX which collapsed badly because of the mismanagement of the user’s fund by FTX former CEO Sam Bankman-Fried (SBF).