© Reuters
Investing.com – Cryptocurrency exchange Binance has admitted to mistakenly mixing client funds with reserve cryptos, according to a Bloomberg report. Reserves of about half of Binance’s 94 self-issued “B tokens” are stored in a wallet named “Binance 8,” which also holds customer funds, according to the report. Mixing client funds with collateral tokens is against Binance’s own guidelines.
“Binance is aware of this error and is moving these assets to dedicated collateral wallets,” Binance said.
B-Tokens are supposed to be collateralized in reserves locked by the cryptos they are based on, and collateral must be stored separately from client funds. Around 40 B-Tokens are listed on the Binance website as being stored in the Binance 8 wallet.
The mixing of collateral tokens with client funds makes it difficult to verify the amount of B-Tokens available for client redemption requests. Binance has maintained that its client assets are backed by sufficient collateral to meet all redemptions.
But the issue of buybacks has risen to prominence in the cryptocurrency industry since Binance’s sale of FTX’s FTT tokens in November sparked a wave of FTX withdrawals that ultimately led to a liquidity crunch and its bankruptcy.
Binance and other cryptocurrency firms have promised to be more transparent and have touted proof of reserves as a way to allay concerns, though analysts point out it’s incomplete and can be misleading.