In response to FTX’s collapse, Binance has released its Proof of Reserves report, which showed the company has $69bn in assets.
Many expected the number to be higher, so it’s not clear if the report managed to calm fears.
Binance is the world’s largest cryptocurrency exchange, and it wanted to quell the fears that FTX’s implosion spread throughout the industry.
As of November 10, the company’s top six currencies list was as follows: 475,000 Bitcoin (BTC), 4.8 million Ethereum (ETH), 17.6 billion Tether (USDT), 601 million USD Coin (USDC), 58 million Binance Coin (BNB), and approximately 21.7 billion of its own stablecoin, Binance USD (BUSD).
The total figure of $69bn in assets was up-to-date as of Thursday.
A number of analysts and industry participants were surprised by two things: the amount of the assets the exchange reported, and the proportion of stablecoins that made it up.
The expectations for the former were that the number would be much bigger, and the latter was simply surprising, especially considering that Coinbase’s proportions are the opposite.
To top it all off, just hours after Binance published its Proof of Reserves report, it moved $2.7bn out of the pertinent wallet, spurring even more frenzied speculation.
At the end of the day, only one thing can really calm the fears of investors: whether the exchange’s reserves outstrip its liabilities. And one can’t be sure whether it can cover for its users by this report alone.
FTX’s story has everyone on edge, and Binance isn’t being clear enough about its liabilities. When asked on Twitter, Binance founder Changpeng Zhao, didn’t reply to the question of liabilities directly, and instead simply answered: “We don’t have debt.”
So, while this answer is not exactly trust inspiring, Binance said that it’s going to continue working towards more transparency, and that it aims to create a “Merkle Tree Proof of Funds” in the future.
However, it’s also important to note that providing the ratios of its cryptocurrency holdings versus its customer deposits – as competitor Gate.io did, and has done for a few years now – is also a necessary piece of data if the goal is evaluating an exchange’s liabilities and liquidity.
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