Binance launches a proof-of-reserves system for its bitcoin holdings

Binance launches a proof-of-reserves system for its bitcoin holdings
Image Credits: Wired

In a move to enhance transparency and regain user trust following the FTX tragedy, Binance has launched a new site explaining its proof of reserves system.

“Given recent events, it is understandable that the community will demand more from crypto exchanges, far more than what is currently required of traditional financial institutions. That’s why we’re pleased to provide this latest feature for our users to verify their funds,” Binance founder and CEO Changpeng Zhao ‘CZ’ said in a statement. 

As of November 22nd at 23:59 UTC, the company held a 101% reserve ratio, which is enough bitcoin to cover all its users’ balances, amounting to 575742.4228 BTC, which is around $9.5 billion at today’s exchange rate.

With this knowledge, Binance aims to assure users that it will not face a similar liquidity crisis, and has enough Bitcoin in reserves to process all user withdrawals.

The new site release is timed a few weeks after Binance started sharing their hot and cold user wallet addresses as part of their “ongoing commitment to transparency and fostering trust in the ecosystem.”

Thanks to the Merkle tree, which includes all individual user accounts behind a cryptographic seal, individual users can use the root hash to check whether their accounts are included in the snapshot of user balances across various products, including Spot, Funding, Margin, Futures, Earn and Options Wallet.

The company also plans to release a similar proof-of-reserves information for ETH, USDT, USDC, BUSD and BNB in the future.

CEO Changpeng Zhao ‘CZ’ continued: “As Binance’s user community is exponentially larger than the next largest exchange, this is a massive under-taking and will take a few weeks to develop the data for the majority of our assets in custody. We are working to get the next update out as quickly as possible to meet the community’s expectations.”

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