Binance Mistakenly Mix User Funds With B-Tokens Collateral
According to reports, the world’s largest crypto exchange, Binance, has acknowledged its mistake after it lumped user tokens and reserves together in the same wallet. Binance had stored user funds and token reserves in the same wallet, which was a mistake by the exchange giant.
Mixing Reserves And User Funds
According to the exchange’s website, the reserve, which is almost half of the 94 tokens (also known as B-tokens), is stored in a wallet named “Binance 8.” As a result, the wallet holds more reserve assets than is required as collateral for these B-Tokens.
For example, as of January 23, the reserve for Binance B is close to 22.700% of the OriginToken (OGN). Thus, this shows that the wallet also holds user funds for Binance.
Furthermore, Binance has also issued its version of ETH and USDC stablecoins and other crypto assets to make them useful on other protocols like the Binance Smart Chain. Meanwhile, the Binance-backed tokens are called B-Tokens and are reportedly pegged 1:1 of their reserve assets.
Commenting on the recent mistake, a spokesperson for the exchange revealed that combining reserves with customers’ funds are contrary to the firm’s guidelines. The spokesperson added that Binance 8, by design, is a cold exchange wallet and that the transfer of collateral assets into the wallet is in error.
The spokesperson further revealed that the exchange is aware of the mistake and has moved the assets to dedicated addresses. However, mixing the assets has made it difficult to determine if Binance’s reserve can cover the B-Tokens it previously issued.
According to the spokesperson, Binance ensures that user funds in its custody are fully backed 1:1. As a result, the mistake is due to an operational oversight which was later identified, the spokesperson further explained.
So far, the world’s largest exchange has issued more than $539 million worth of the B-Tokens with their collateral held in the Binance 8 wallet.
CEO Alleges FTX Funds FUD Against Binance
According to the founder and CEO of Binance, Changpeng Zhao, the now bankrupt crypto exchange, FTX is behind the publication of a supposed Binance fear, uncertainty, and doubt (FUD).
The CEO stated that the embattled FTX paid a crypto news platform $43 million to publish malicious FUD against Binance and that the negative publications have been ongoing for some time.
Changpeng Zhao claimed that crypto players with short positions had been known to stir negative speculations to give their trade the upper hand. However, the CEO stated that he is at peace with skeptics’ opinions of how Binance operates.
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