- CryptoQuant published a report claiming that Binance’s proof of reserve is at least 99% accurate.
- Binance’s BNB holding has a “clean reserve” rating, which bodes well for the exchange.
- CryptoQuant clarified its report should not be interpreted as a “favorable opinion” of Binance.
Heavily-battered crypto exchange Binance received some validation from on-chain analysis platform CryptoQuant, which published a report claiming that the exchange’s proof of reserve (PoR) is indeed solid.
According to the report, Binance’s bitcoin (BTC) reserve is “very close to [CryptoQuant’s] estimation” of up to 99%. CryptoQuant also claimed a similar thing for the exchange’s ether (ETH) reserve. This is very important, given that these two assets are the largest cryptocurrencies in terms of market capitalization.
As for Binance’s reserve of its native asset, appropriately named Binance Coin (BNB), the analysis firm gave a “clean reserve” rating. This rating, according to the platform, means “BNB is still a low proportion of its total assets.”
It is very important for exchanges to not rely on their issued tokens or coins for their PoR because this is where FTX failed. Specifically, FTX plummeted almost overnight since it held a significant amount of its native token FTT. When the price of FTT plunged, so did the value of crypto assets held by the exchange.
As to the question of whether crypto users should trust Binance’s PoR audit, CryptoQuant answered:
“The short answer here is that we don’t have to. We can use on-chain data to compare the results of Binance’s PoR report with CryptoQuant’s estimate of Binance’s BTC reserves.”
However, CryptoQuant clarified that its report is not meant to be interpreted as “a favorable opinion of Binance as a company.” Rather, the report only shows that the exchange’s BTC holding as liabilities “makes sense.”
The report came amid Binance’s heavy beating from mainstream media, as well as from crypto users, including those who lost money after the collapse of FTX.
To be fair, given the loss of trust in crypto especially after what happened to FTX, the grilling of BInance, especially its CEO Changpeng Zhao, has become a norm. One person even said that this skepticism will hopefully become “the new industry standard” to prevent fraud in the crypto industry moving forward.
