According to the Proof-of-Reserves of the cryptocurrency exchange Binance, the exchange may have sold, invested or reallocated up to $8 billion in Bitcoin, Ethereum and USDT from its reserve assets last month. Such a large amount of change has attracted market attention.
Binance’s additional reserve assets have shrunk significantly
Coindesk reported that Binance listed approximately $14 billion in reserve assets in its reserve proof in December 2024, part of which were excess reserves. In addition to meeting 100% of user funds guarantees, there were additional reserves. However, as of February 1 of this year, these additional reserves had been significantly reduced.
According to Binance’s asset reserve report for that month, the company’s non-user net assets include 2,746 BTC, 275 million USDT, 174 ETH, and 4.86 million BNB.
However, these figures represent a significant drop compared to the snapshot taken in December last year. At that time, Binance’s non-user assets were 46,896 BTC, 2.989 billion USDT, 216,312 ETH, 5.83 million BNB, etc. Converted into U.S. dollar value, the asset has shrunk by more than $8 billion.
Market observer AB Kuai Dong also pointed out that most tokens have been sold off, with some converted into the stablecoin USDC. Among them, BNB had the lowest reduction, at only 16%.
The direction of capital flow is unclear, and market speculation is rampant
As of now, there is still no clear information explaining the whereabouts of these funds. The community speculates that part of the funds may be used to pay fines from regulators led by the U.S. Securities and Exchange Commission (SEC), or may be related to the recovery of funds (clawback) during FTX’s bankruptcy liquidation process.
(SEC’s last ditch effort? Another amended lawsuit accusing Binance and CZ of illegal securities trading)
Dong also attached an explanation from F2pool co-founder Shenyu, who believed that this might be just a one-time case of profit withdrawal at the beginning of the year, which had happened before in June 2023 and February 2024 when it faced regulatory fines.
So far, Binance founder CZ, current CEO Richard Teng and others have not responded to this.
The assets sold are not user funds
It is worth mentioning that despite the significant reduction in reserve assets, users do not need to panic, as Binance’s financial situation remains healthy. Data shows that the exchange holds 34 crypto assets with a total value of US$160 billion, and all of these assets are reserved at a ratio of 1:1 or higher.
