To prove to an auditor that it has control over the claimed address, Binance moved 127,351 bitcoin ($2 billion).
Binance moves $2 billion of bitcoin as part of reserves audit
Today’s transfer of such a sizable amount of bitcoin from Binance to an unidentified wallet raised concerns about the transaction’s nature among the crypto community. Changpeng Zhao, CEO of Binance, responded and stated that the transfer is a component of a current audit at Binance.
“This is part of the Proof-of-Reserve Audit. The auditor requires us to send a specific amount to ourselves to show we control the wallet. And the rest goes to a Change Address, a new address,” Zhao claimed. He added the exchange had rotated the funds to a new address in its control.
The first proof-of-reserves mechanism was unveiled last week, a prototype designed to demonstrate that Binance has the reserves required to cover all customer deposits. It is currently developing a more thorough audit.
After the demise of the centralized cryptocurrency exchange FTX, pressure on other exchanges to implement “proof of reserves” has risen sharply. Exchanges can state that they have the reserves to meet customer withdrawal requests by posting the total amount of assets and liabilities. These initial reserves, however, do not necessarily depict the entire situation because they do not include information on the exchange’s liabilities.
Reserves may be displayed in one of two ways or both. As indicated by security firm Halborn, the first method entails examining the reserves by independent third-party auditors. The second method entails releasing a list of public addresses that hold various assets. Each has distinct advantages and disadvantages.
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