Recent media interpretations of large Binance wallet transactions and comparisons with the behavior of collapsed FTX are incorrect, if not deliberate misinformation, the company said.
Understanding how wallet operations work can be difficult. And we’ve noticed the recent spread of misinformation on this topic.
In the interest of transparency and education, we’ve published this new deep dive into our wallet management system.https://t.co/5EI15Ri61F
— Binance (@binance) March 1, 2023
‘Major crypto exchanges operate complex management systems that must dynamically work with cold and hot wallets to ensure security and liquidity,’ Binance specialists noted.
They noted that the exchange’s average daily trading volume is around $38 billion. Against this figure, the exchange must maintain seamless withdrawals. In this process, assets constantly flow between addresses connected to it—users receive their coins from hot wallets.
In Binance they stressed that, as in Forbes’ recent publication and in earlier statements, researchers have tracked large transfers by the exchange. This is possible thanks to the company’s transparency policy and the native properties of the blockchain.
However, most of these transactions were withdrawals by institutional clients, which also required consolidation of assets on a hot wallet. External experts could not tie such transfers to changes in user balances—this information is confidential.
‘The lack of a full picture of how our processes work leads some reporters to draw incorrect conclusions about the nature of the transactions they see,’ Binance said in a statement.
The company also stressed that corporate and client funds are kept separate, and any issued “wrapped assets” are over-collateralized.
Thanks to the Proof-of-Reserve service, any user can verify that there are sufficient reserves to back both their assets and any Binance tokens, they noted.
The company acknowledged that reserve-management processes have not always been flawless, but this did not relate to their sufficiency. At the same time the system continues to improve.
‘All attempts to cast Binance as a collapsed FTX will continue to fail. Why? Because we back user assets 1:1 and continually demonstrate that withdrawals can be made at any time,’ the exchange’s specialists concluded.
Earlier, Binance CEO Changpeng Zhao, in response to the «FUD-accusations» from Forbes, also noted that it is not appropriate to lump the exchange with FTX. Binance calmly endured a daily outflow of $3 billion in stablecoins in December 2022.
In January, Zhao said that FTX paid an unnamed media outlet $43 million for a FUD campaign against the exchange he leads.