Binance Reserves are Accounted For and Fully Backed: Report

Paigambar Mohan Raj
Source: Reuters

Over the past few days, Binance, the world’s largest crypto exchange, faced a string of issues coming from reports of possible charges against the firm. The news led to a large number of withdrawals from the platform. According to data, the exchange witnessed $5 billion worth of withdrawals on December 13th. However, a recent report by CryptoQuant showed that Binance has sufficient reserves and is fully backed.

After the fall of FTX, exchanges were under pressure to publish their Proof-of-Reserves (PoR). Binance released its PoR earlier this month but was met with criticism. The auditor did not offer their professional judgment or an assurance conclusion, and they did not make any claims about the “agreed-upon procedure.”

However, CryptoQuant has confirmed the auditing company Mazars’ findings. CryptoQuant claims that the liabilities stated by Binance are near their 99% estimate. According to the study, 97% of the exchange’s assets are security for its BTC liabilities (client deposits). When the BTC lent to clients is considered, the collateralization rises to 101%.

Will Binance become another FTX?

Since Binance is the largest exchange by trading volume and one of the largest by user deposits, its PoR is crucial to the cryptocurrency industry. CryptoQuant added that on-chain data indicated that Binance’s Ethereum (ETH) and stablecoin reserves are not behaving in an FTX manner. Moreover, the exchange has a respectable “Clean Reserve.” This means that the percentage of its coin, BNB, to its overall assets is small.

Approximately 10% of the exchange’s reserves are held in its coin, according to Nansen. In its publicly available addresses, Binance presently has $60.4 billion in assets, $6.2 billion of which are BNB, according to their report.

At press time, BNB was trading at $262.61, down by 1.2% in the last 24 hours. Moreover, BNB is down by 61.9% from its all-time high of $686.31, attained in May 2021.