Binance Called Out for Hypocrisy After Moving Funds from Its Proof-of-Reserve Wallet
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The crypto community is criticizing Binance for withdrawing $2.7 billion from their proof-of-reserve wallet. The exchange reacted by stating that the transfer was to a cold wallet for TRX.
As soon as the crypto world heard that Binance had transferred $2.7 billion out of its “proof of reserves” wallet, all eyes were now on the exchange. Interestingly, a recent Reddit thread claimed that the exchange lacked sufficient documentation of its BNB chain reserves.
Some members of the community assert that 20 hours after publishing its report, Binance transferred 2.7 billion USDT. The fact that the destination address was left out of the report was observed. Later, 200 million USDT were returned, leaving 2.5 billion in the unidentified wallet.
Binance Explains Its Reason for Moving Funds from the Wallet
In a response to the report, Binance said that the unnamed wallet was a TRX cold wallet. “The asset movements [highlighted] are the result of standard operations that move funds between our internal wallets,” the giant crypto exchange said.
Additionally, a representative of Binance disclosed that the exchange was collaborating with Vitalik Buterin to develop a Merkle tree proof of reserve for related purposes. This will enable code-based verification of the reserves and liabilities.
That doesn’t imply, though, that the crypto community has given the exchange a pass. Members of the community cited a previous tweet of CZ in response to the Binance response to the initial post. The CEO said in it, “If an exchange has to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU.”
If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU. 🙏
— CZ 🔶 Binance (@cz_binance) November 13, 2022
Exchanges Pressed to Prove Liquidity Amid FTX Saga
There are other exchanges besides Binance that are posting proof-of-reserves. The same was done by Gate.io and Kraken, who also included liabilities in their audits.
Major exchanges have conducted audits and published proofs of reserves as a result of the FTX crash to reassure the cryptocurrency community that its members’ monies are secure.
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