The exchange will be revealing cold wallet addresses and balances for its top six currencies, according to an announcement made by Binance CEO CZ on November 10. The action is a reaction to the effects of this week's collapse of the FTX exchange. The former second-largest centralized exchange has collapsed due to overleveraging and a wave of withdrawals.
40 billion dollars worth of stablecoins
Binance pledges to be transparent about its reserves to convince consumers that it has them in full. According to CZ, this information was always available, but it is now simpler to understand and obtain. According to the website, there are 475,000 bitcoins in the cold wallet of Binance (1). This is worth about $8 billion at the current market price. At 4.8 million ETH, its Ethereum reserves are under$6 a billion now.
According to the cold wallet listings, the USDT, BUSD, and USDC stablecoins totaled about $40 billion. With a staggering 27% of all stablecoins in circulation, Binance is a colossus regarding stablecoin reserves. The underpinning of that enormous hoard of stablecoins hasn't yet been properly exposed. The business also said it was working on a Merkle tree proof-of-reserves that will be available in the upcoming weeks.
CZ suggested that all cryptocurrency exchanges implement proof-of-reserves on November 9. "Banks rely on little amounts of reserves. Bitcoin exchanges shouldn't, he continued. Chainlink (2), a supplier of data oracles, has highlighted its proof-of-reserve tools.
Although Chainlink PoR was introduced in 2020, there has never been a more pressing need. A contract for immutable proof of reserves can be used to confirm that adequate reserves have undergone an independent audit. The objective is to boost investor trust in the exchange or the assets they invest in.