Binance’s collateral and user funds were “mistakenly” held in one wallet

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  • Binance is reportedly working on fixing the “error”.
  • The crypto exchange has released a proof of collateral report for all 94 Binance pegged tokens or B-Tokens.
  • Data suggested that the Binance wallet containing the exchange’s own token reserves also contained user funds.

Binance has reportedly acknowledged storing customers’ funds in a wallet that also holds the cryptocurrency exchange’s internal tokens.

A report of Bloomberg revealed on Tuesday that Binance had admitted the fact, but noted that it had done so in error.

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The Binance wallet contains B tokens and client funds

According to details attributed to a Binance official, the report noted that the exchange had said the “mixing” of client funds and collateral for its B-Tokens was done accidentally.

B-Tokens are Binance pegged versions of crypto tokens such as Bitcoin, Ethereum and Polkadot. They are wrapped tokens usable in BNB Smart Chain and other ecosystems.

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Binance’s proof of collateral report for its in-house tokens released Monday showed that the leading crypto exchange had all 94 B-Tokens fully collateralised. But while the tokens are supposed to be backed 1:1, the proof of collateral page showed that many tokens had far more reserves than needed to match the tokens issued.

This indicates that user funds are also stored in the Binance 8 wallet.

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The exchange explained the “mistake”, noting that the said wallet is a Binance cold wallet that accidentally received collateral. The exchange had begun to fix the bug, the report added.

The Binance Coin token was trading higher on Tuesday despite the news, with BNB up 3.5% at the time of writing to change hands around $314.

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