Collateral funds and Binance users were «incorrectly» held in one wallet

Collateral funds and Binance users were "incorrectly" held in one wallet

  • Binance is allegedly working to fix the “error”.
  • The crypto exchange issued a proof of collateral report for all 94 Binance-pegged tokens, or B-Tokens.
  • Data indicated that the Binance wallet had user funds that also held the exchange’s own token reserves.

Binance has admitted to storing customer funds in a wallet that also holds the cryptocurrency exchange’s internal tokens.

A report with Bloomberg on Tuesday indicated that Binance had acknowledged the fact, but noted that this happened erroneously.

Binance wallet holds B-Tokens and customer funds

According to details attributed to Binance officials, the report noted that the exchange had mistakenly ‘mixed’ customer funds and collateral for its B-Tokens.

B-Tokens are Binance pegged versions of crypto tokens such as Bitcoin, Ethereum and Polkadot. They are wraparound tokens that allow usability across the BNB Smart Chain and other ecosystems.

Binance’s collateral proof report for its in-house tokens released on Monday showed that all 94 B-Tokens were fully collateralized by the leading crypto exchange. But although the signals are supposed to be supported 1:1, the proof of collateral page showed that many tokens had significantly more reserves than what is needed to match the issued tokens.

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

The exchange explained the «error», noting that the wallet was a Binance cold wallet that mistakenly received collateral assets. The exchange has begun to correct the error, the report said.

The Binance Coin token traded 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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