Top Auditing Firm Finds Binance’s BTC Reserves Collateralized By Over 100%
Mazars, a global auditing firm, says that the big cryptocurrency exchange Binance has enough cash on hand to back its users’ Bitcoin (BTC).
The auditing report comes after Binance said it would make its finances more clear after the collapse of the cryptocurrency exchange FTX.
Binance announced a proof-of-reserves (PoR) system at the end of November. This system will show that investors’ assets are equal to their reserves. Binance first released Bitcoin data, which showed a 101% ratio of Bitcoin holdings to customer holdings, with an on-chain reserve of 582,485 Bitcoin and a customer net balance of 575,742 Bitcoin as of 23:59 UTC on November 22, 2022.
Binance asked for a new auditing report from Mazars for the same point in time, and the report seems to back up Binance’s claim.
“With the inclusion of In-Scope Assets lent to customers through margin and loans which are overcollateralized by Out-Of-Scope Assets, we found that Binance was 101% collateralized.”
Mazars says that the audit was small because of the terms that had been agreed upon with Binance. These terms are called Agreed-Upon Procedures (AUP).
“This AUP engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported.”
Mazars had Binance make transactions on wallets as part of the audit to prove that they owned the addresses.
Binance has said it will show proof of reserves for other cryptocurrencies like Ethereum (ETH), but as of this writing, it hasn’t done so yet.
Jesse Powell, the founder and former CEO of Kraken, said in the past that exchanges could be more open if they showed their financial liabilities and proof of reserves.
Nansen, a company that analyzes cryptocurrencies, says that Binance has about $67 billion worth of cryptocurrencies, which is three times more than 11 other exchanges put together.
