Binance is fully committed to transparency, according to CEO Changpeng Zhao (CZ). The largest crypto exchange has released details on its hot and cold wallet holdings as proof of reserves in response to the FTX fiasco.
The exchange announced that they would be publishing cold wallet addresses and balances for its top six coins. The move comes in response to the fallout of the collapse of the FTX exchange this week. Over-leveraging and a cascade of withdrawals have been the downfall of the once second-largest centralized exchange. Binance wants to reassure customers that it has full reserves by committing to transparency about them. CEO CZ said this data was already available, but now it’s easier to read and access.
$40 Billion in stablecoins
The Binance cold wallet for Bitcoin apparently contains 475,000 BTC. At current market value, this is worth around $8 billion. Its Ethereum reserves stand at 4.8 million ETH, worth just below $6 billion at the moment. The cold wallet listings also revealed almost $40 billion in stablecoins USDT, BUSD, and USDC. Binance is a behemoth when it comes to stablecoin reserves, holding a whopping 27% of all stablecoins in circulation.
#Binance published cold wallet addresses and balances for 6 of our 600 coins. More to come.
These were public before anyway, but organized together for your ease of viewing.https://t.co/Jm6dVoDqM5
— CZ ? Binance (@cz_binance) November 10, 2022
Additionally, the company said it was working to create a Merkle tree proof-of-reserves that will be released in the next few weeks. CZ claimed that all crypto exchanges should do proof-of-reserves. According to the Binance CEO, banks run on fractional reserves. Crypto exchanges should not. Data oracle provider Chainlink has its own proof-of-reserve tools that it has been touting recently. Chainlink PoR was launched in 2020, but there has never been a greater need for it than now. An immutable proof-of-reserve contract can be used to verify there are sufficient reserves that have been independently audited. The goal is to increase customer confidence in the exchange or assets being invested in.
Topping up the insurance fund
Right after FTX started crumbling, Binance stated that in light of recent events, it has topped up its SAFU insurance fund. The Secure Asset Fund for Users is an emergency fund established in 2018. Its purpose was customer protection in extreme situations. The crypto-based fund was worth $1 billion at the beginning of the year. However, due to market conditions, its value had fallen to $735 million. Binance has now topped up the BUSD, BNB, and BTC-based fund to $1 billion again.
"As of November 2022, we’ve topped the SAFU balance back to $1B. We made a promise to our user base, along with the larger crypto ecosystem, that SAFU would always maintain a sizable level. We’ll continue to uphold that promise and continue to keep building." - Binance announcement