Binance, the world’s biggest crypto exchange has hogged the limelight as it brought attention to the significance of Proof Of Reserves [PoR] in the wake of FTX’s bankruptcy.
But of late, the crypto community took note of a $2.7 billion USDT transfer from its proof-of-reserves wallet that occurred less than 24 hours after publication.
A Reddit post by a user called OneThatNoseOne accused the trading platform of not disclosing the wallet in their proof-of-reserves article.
The Redditor also argued that Binance’s involvement in such activities was hypocritical given how the company supported customers in their efforts to remove cash from exchanges and promoted proof of reserves following the FTX fiasco.
Not only that, there were some additional funds missing from other wallets in the platform’s PoR snapshot, the user alleged.
Sure, companies have the right to manage and store their funds in whatever way they like. They aren’t bound to keep it in any particular wallet. But that begs the question, why not just disclose their new wallet with a simple addition to their published proof of reserves statement? Why not properly organize and manage their funds so that they wouldn’t look shady making such transactions after the fact [of publishing reserves].
At a time when customers’ trust in crypto is at an all-time low, the anon user called upon Binance to take steps in providing transparency so that users don’t have to sift through tons of data for something they could have easily provided.
“Whether this is funny business they are engaged in or just management incompetence, either way, it is not good at all,” the post concluded.
Binance Termed The Transfer As “Standard Operations”
In response, Binance commented that the ‘undisclosed wallet’ in question is one of its cold TRX wallets and that the transfer of the assets was a “standard operation between internal wallets.”
With regards to the Proof of Reserves, the crypto exchange said its PoR audit is not yet completed, causing “confusion” among users. Additionally, they will soon produce a “Merkle tree proof of reserves” in collaboration with Ethereum founder Vitalik Buterin.
“This will ensure that users no longer have to “trust” Binance or any other platform because it will be verified by code. This is as it should be, and frankly, we feel that we’ve let the industry down by not developing this sooner.”