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Binance hopes to ensure that reserves do not mix with client funds henceforth.
Cryptocurrency exchange giant Binance has just launched what it calls a semi-automated system for its tokens. According to a Bloomberg report, this system will enable the exchange to properly manage its token reserves.
Just last month, the crypto exchange admitted to errors that arose with tokens it issues, which were not always fully backed. At the time, it acknowledged that for a long, the tokens it issued had reserves that were either mixed with customer funds or sometimes were missing. There was also one major stablecoin, whose reserves were not properly documented between 2020 and 2021, leaving about $1 billion in externally visible funds missing.
While it noted that those issues have now been fixed, Binance has created a new process that ensures that B-tokens are “always transparently backed.” This means that for the system to allow new coins to be minted, collateral must first be in place. That is in the corresponding wallet.
About the collateral, a company spokesperson noted that B-token assets have always been backed by collateral. However, the new move is in line with the exchange’s resolve to be more transparent with its dealings. He said:
“This collateral has always been backing our users’ B-token assets and has always been available for withdrawal at any time. We are now simply showing it on-chain in dedicated wallets where it will remain until it may be required.”
Binance Justifies Semi-Automated System
Meanwhile, Binance has also given reasons for opting for a partially automated process rather than a fully automated one. According to the spokesperson, the decision has everything to do with security. He said:
“Processes that require manual intervention are slower, but more secure.”
Essentially, this means that Binance may now quickly swing into action in the event that a hack happens. Furthermore, Binance also has more control over any such incident that may potentially impact the B-Token reserves.
As of publication, Binance is yet to issue an official statement. However, it appears that it hopes to ensure that reserves do not mix with client funds henceforth.