Binance Shifts to ‘Semi-Automated’ Process to Manage Reserves of Tokens It Issues
Reserves for these tokens had previously been mixed with customer funds.
Binance is moving to a “semi-automated” process for managing the reserves of tokens it issues after years in which reserves were mixed with customer funds and at least one major stablecoin, Binance-peg BUSD, was not always fully backed.
The crypto exchange acknowledged the problems last month with the tokens, also known as B-tokens, and said they had been fixed.
"Per recent media reports, historically, the assets we used to collateralize B-token weren’t always kept in dedicated wallets," a Binance spokesperson told CoinDesk. The spokesperson said that Binance has now established 35 dedicated wallets to hold collateral for B-tokens, and its new process ensures that minting only takes place after collateral is added to the appropriate, dedicated wallet.
"Over the last few weeks, we have been moving the collateralized assets to dedicated wallets, one for each network, to make the 1:1 backing clearly visible," the spokesperson 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 said it had decided to make its new process partially, rather than fully, automated, in order to limit security risks.
Bloomberg initially reported about the move.
UPDATE (Feb. 23 16:23 UTC): Updated to remove Bloomberg from the headline and add direct comments from Coinbase.
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