Binance Mistakenly Stored User Funds and Fund Collateral in the Same Wallet

Binance, the largest cryptocurrency exchange, admitted that it held part of the funds to secure its own Binance tokens along with users’ assets. But she claims she did it by mistake.

Edition Bloomberg found out that the funds were stored in a wallet called “Binance 8”. The amount of assets at this address significantly exceeds the amount required to secure the tokens issued by the exchange. These are wrapped tokens on Binance Smart Chain and Binance Chain (such as DAI, MKR, UNI, and MATIC).

Bloomberg reported that the exchange issued over 40 tokens in BNB Chain worth $539 million, although the amount of “collateral” for these tokens in the wallet was much higher – $1.8 billion. than $16 billion.

The representative of the exchange admitted that the funds were indeed mixed with client funds, but this was the result of an “erroneous” transfer of collateral to one wallet with clients’ assets. The specialists of the trading platform are already working on a solution to this problem. At the same time, Binance does not specify when exactly the error was discovered.

Such mixing of funds would not have raised any questions before, if there had not been a resounding bankruptcy of another popular cryptocurrency exchange, FTX, in November. Among the factors that directly affected the solvency of the company was the mixing of user funds between two companies – the Alameda Research fund and, in fact, FTX. Moreover, the company’s management deliberately left a loophole so that the fund could use the money of the exchange’s clients, covering losses from transactions.

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