Binance Begins Its Proof-of-Reserves After FTX Collapse

Binance has launched a proof-of-reserves system, beginning with Bitcoin, to demonstrate that the exchange is healthy and solvent.

This comes just weeks after rival exchange FTX went bankrupt after allegedly exchanging user funds for other, less liquid tokens, resulting in a liquidity crisis. Binance’s goal is to demonstrate that it holds the assets of its users in the same tokens that they have deposited.

Binance has provided a snapshot of account balances and the exchange’s Bitcoin reserves for Bitcoin. It claims 582,485 Bitcoin in reserves, while its users have a net balance of 575,742 Bitcoin, for a margin of 6,743 Bitcoin. It also included a link for Binance users to use to verify their Bitcoin on the exchange.

Zhao stated that Binance is in a strong position and is focused on market growth rather than profit.

“We have enough revenue today,” he said. “We do not try to maximize profits. We want to be sustainable.”

He also mentioned that startup valuations were astronomical a year ago and have since settled back down to reasonable levels.

Binance has stated that it will add more tokens and blockchains in the coming weeks. It also intends to enlist the help of third-party auditors to audit the proof-of-reserves system and to use zero-knowledge proof technology to provide cryptographic proof of its claims while protecting user privacy.

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