Binance in Hot Water After Moving $2.7B Out of Proof of Reserves Wallet

18 November 2022, 08:02 GMT+0000
Updated by Ryan James
20 November 2022, 11:55 GMT+0000
In Brief
  • The crypto community noticed that Binance moved $2.7 billion out of its proof-of-reserves wallet.
  • Binance responded, saying that it was a move to a TRX cold wallet.
  • Crypto community members are also doubting the reserves, saying it is inadequate for what is in the BNB ecosystem.
  • promo

Binance is receiving flak from the crypto community after moving $2.7 billion out of its proof-of-reserves wallet. The exchange responded, saying the move was to a TRX cold wallet.

Update Nov 20. (12:00UTC): Global economist, Anthony Roubini, recently has also commented on the move of $2.7 billion out of the Binance “proof of reserves” fund by calling out the Binance CEO’s words as “mud”

All eyes are turning to Binance as the crypto community noticed that the exchange had moved $2.7 billion out of its “proof of reserves” wallet. Another Reddit post also stated that the exchange did not hold adequate proof of reserves on the BNB chain.

$2.5B moved out of a Binance wallet
$2.5 billion moved out of a Binance wallet: Reddit

Some community members claim that Binance moved 2.7 billion USDT 20 hours after it had published its report. It was noted that the destination address wasn’t mentioned in the report. 200 million USDT was later moved back, leaving 2.5 billion USDT in the undisclosed wallet.

Binance has since responded to the post, noting that the undisclosed wallet is a TRX cold wallet. The executive stated, “the asset movements [highlighted] are the result of standard operations which move funds between our internal wallets.”

/Related

More Articles

Binance official also mentioned that the exchange was working with Vitalik Buterin to create a Merkle tree proof of reserves for related purposes. This will let the reserves and liabilities be verified by code.

However, that doesn’t mean the exchange has been let off easy by the crypto community. In response to the Binance response to the original post, community members pointed to an old tweet of CZ’s. In it, the CEO remarked, “If an exchange has to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU.”

Crypto community doubting Binance

The crypto community is also pointing to what it says are inadequate proof of reserves for various currencies. The post said that Binance “fails to provide adequate proof of reserves for assets in the BNB chain.” It went even further in saying that “Binance could create fake tokens in the BNB ecosystem that are not backed by any underlying asset and then selling and using assets.”

The post points to several tokens that don’t have enough reserves for what is circulating in the BNB ecosystem. They also refer to a post by Binance talking about how proof-of-reserves could be the solution to exchange’s holding assets.

Other exchanges also release proof-of-reserves

Binance is not the only exchange that is publishing proof-of-reserves. Kraken and Gate.io have both done the same, including liabilities in their audits.

The FTX collapse has led to major exchanges doing an audit and publishing proof-of-reserves to convince crypto community members their funds are safe.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

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.