Binance Crypto Exchange Admits to Mixing Customer Funds with Collateral for Binance-Issued Tokens
Major crypto exchange Binance kept collateral for some of the cryptoassets it issues in the same wallet as the customer funds by mistake, Bloomberg reported, citing a Binance spokesperson.On Monday, Binance released a proof-of-collateral report for B-Tokens, which are the 94 Binance-minted tokens.
The report, however, showed that reserves for nearly 50% of all these coins that Binance issues, were at that point stored in a single wallet called 'Binance 8'.
This wallet held far more tokens in reserve than is required by the amount of B-Tokens, which suggested that collateral was being mixed with customers’ funds instead of being stored separately.
The problem was found even earlier, on January 17, by DataFinnovation and ChainArgos co-founder Jonathan Reiter, who said that the excessive overcollateralization of some B-Tokens and Binance’s use of the Binance 8 wallet showed "obvious mixing of client and peg-backing funds."Not having separate, dedicated wallets for customer and exchange funds goes against the exchange's own guidelines.According to Bloomberg, a spokesperson said that,"Binance 8’ is an exchange cold wallet.
Read more on cryptonews.com
