February 5, 2023

Bloomberg: Binance Stored User Funds and Collateral Assets in the Same Wallet

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Bloomberg: Binance Stored User Funds and Collateral Assets in the Same Wallet

The largest cryptocurrency exchange assured that it was holding part of the funds to secure its own Binance tokens along with user assets by mistake.

According to Bloomberg, the funds were heldin a wallet called "Binance 8" - the amount of assets at this address significantly exceeds the amount needed to support the 94 tokens issued by the exchange. These are wrapped tokens on the Binance Smart Chain and Binance Chain networks.

Now there are 1 in the wallet.44 million ETH coins worth more than $2.3 billion, as well as various tokens worth more than $10 billion. This is a company cold wallet and should not have assets to back Binance's native tokens.

"Assets for collateral were mistakenly movedto the Binance 8 cold wallet. At the same time, on the reserve confirmation page for our tokens, everything is calculated correctly. We are aware of the error and are in the process of transferring collateral funds to special wallets dedicated specifically to storing collateral,” a Binance spokesperson told the publication.

According to analysts of the publication, the Binance 8 wallet holds collateral for more than 40 tokens on Binance networks. The total amount of collateral assets was $539 million.

Bloomberg: Binance Stored User Funds and Collateral Assets in the Same Wallet

In traditional financial institutionsit is strictly forbidden to keep collateral on the same accounts with user deposits. It is also considered a flagrant violation of the rules of most regulators.

It was recently reported that some users of the Binance exchange from Russia faced account blocking.