Binance is fully committed to transparency, according to CEO Changpeng ‘CZ’ Zhao. It has released details on its cold wallet reserves as proof.
On Nov. 10, Binance boss CZ announced that the exchange would be publishing cold wallet addresses and balances for its top six coins.
The move comes in response to the fallout of the collapse of the FTX exchange this week. Over-leveraging and a cascade of withdrawals have been the downfall of the once second-largest centralized exchange.
Binance wants to reassure customers that it has full reserves by committing to transparency about them. CZ said this data was already available, but now it’s easier to read and access.
Binance Has $40 Billion in Stablecoins
The Binance cold wallet for Bitcoin contains 475,000 BTC, it claims. At current market value, this is worth around $8 billion. Its Ethereum reserves stand at 4.8 million ETH, worth just below $6 billion at the moment.
The cold wallet listings also revealed almost $40 billion in stablecoins USDT, BUSD, and USDC. Binance is a behemoth when it comes to stablecoin reserves, holding a whopping 27% of all stablecoins in circulation. What hasn’t been fully disclosed yet is the backing of that massive stash of stablecoins.
Additionally, the company said it was working to create a Merkle tree proof-of-reserves that will be released in the next few weeks.
On Nov. 9, CZ said that all crypto exchanges should do proof-of-reserves. “Banks run on fractional reserves. Crypto exchanges should not,” he added.
Data oracle provider Chainlink has its own proof-of-reserve tools that it has been touting recently. Chainlink PoR was launched in 2020, but there has never been a greater need for it than now.
An immutable proof-of-reserve contract can be used to verify there are sufficient reserves that have been independently audited. The goal is to increase customer confidence in the exchange or assets being invested in.
SAFU Top Up
On Nov. 9, Binance stated that in light of recent events, it has topped up its SAFU insurance fund. The Secure Asset Fund for Users is an emergency fund established in 2018. Its purpose was customer protection in extreme situations.
The crypto-based fund was worth $1 billion at the beginning of the year. However, due to market conditions, its value had fallen to $735 million. Binance has now topped up the BUSD, BNB, and BTC-based fund to $1 billion again.
BNB has dropped 11% over the past week and currently trades at $292.50, according to CoinGecko.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.