Binance’s bitcoin reserves are overcollateralized

Crypto exchange Binance has published a proof-of-reserves, audited by financial advisory firm Mazars, showing that Binance’s bitcoin reserves are overcollateralized.

Binance underwent proof-of-reserves by Mazars on Nov. 22. To date, Binance bitcoin reserves were overcollaterised by 101%:

At the time of assessment, Mazars observed Binance controlled in-scope assets in excess of 100% of their total platform liabilities.

Following the FTX collapse, Binance created a webpage dedicated to the transparency of the crypto exchange. The Binance site explains to the users how the exchange’s proof-of-reserves is conducted. Stressing the company goals to provide transparency, protection, and safety of funds, Binance seems only to confirm it with the audit from Mazars.

In order to show that Binance has all user assets 1:1, we have built and implemented the Merkle tree to allow people to verify their assets within the platform. Our goal is that every user will be able to verify their asset holdings using their own generated Merkle hash/record ID. This way people will be able to confirm that their funds are held 1:1 and they can have it verified by a third-party audit agency.

Of course, it’s not a complete proof-of-reserves. Mazars analyzed only Binance bitcoin holdings. Binance claimed that its users held 575,742.4228 BTC and that it had enough BTC and wrapped BTC to cover 101% of those funds. The company then turned to Mazars so the audit firm could independently verify the cryptocurrency exchange’s data.

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Binance CEO, Changpeng Zhao, stated:

As Binance’s user community is exponentially larger than the next largest exchange, this is a massive under-taking and will take a few weeks to develop the data for the majority of our assets in custody. We are working to get the next update out as quickly as possible to meet the community’s expectations.