Binance, the world’s largest cryptocurrency exchange, made detailed explanations about how and why assets move between exchange wallets, based on the allegations that have been circulating in the market recently.
Binance, recently put forward by Forbes Unauthorized transfer of $1.8 billion of client assets to hedge funds published a blog post with details about the stock exchange’s reserve systems. Clarifying why assets move between exchange wallets in the post, Binance emphasized that everything is recorded transparently on the blockchain.
Wallet Management: Why Move Assets?
While Binance stated that it had to work dynamically between hot and cold wallets in terms of providing liquidity, he said that the two aspects of this system, liquidity and security, should be kept in mind.
As we mentioned before, we have an extensive network to transfer funds quickly and efficiently. We maintain a real-time internal ledger for each of our users. You can verify this on our reserve floor system. However, it is almost impossible to accurately understand the fund movements with an outside eye.
Emphasizing that user assets and Binance’s institutional assets are completely separate, the exchange stated that the movement between wallets can act for various purposes.
Exchange, a Binance cold wallet with hot wallet usually a transaction between provide liquidity for in-demand tokens or an individual “whale” or a Binance corporate account hedge fund possible one-time to support a large user attraction underlined that. The blog post described the movement of funds between Binance’s hot wallet and an external wallet as very likely “a user’s withdrawal.”
Binance determines exactly how much each user owns which asset. is constantly recorded and all these records proof-of-reserve system (PoR) that it can be reached through
Major crypto exchanges run sophisticated wallet management systems that must work dynamically with cold and hot wallets to ensure both liquidity and security. To avoid scrutiny, some exchanges like FTX have in the past decided to keep most of their wallet addresses private. However, Binance has decided that regardless of the bad reviews by the press, it will not abandon its commitment to the transparency that blockchain entails.
However, Binance periodically recycles the funds in their wallets through a process called consolidation. omnibus He also mentioned that it was transferred to their hot wallets. This process while keeping wait times and costs low for users It was stated that it helped in meeting the withdrawal requests.
In addition, what is considered as excess funds and for the moment urgently assets that do not need liquiditytransferred to secure cold wallets were explained with the following statements:
Excess funds are moved from hot wallets to secure storage in cold or offline wallets. We call this process an overflow. When funds are running low on a hot wallet, it may be necessary to top up from a cold wallet. The point to note here is that the movement of funds between deposits, hot and cold wallets (all visible on the blockchain) occurs completely independently of user account balance updates.
On the other hand, Binance stated that it welcomes the recent review by the media. make themselves and the industry stronger stated. But before users and media alike get the wrong idea, need to be more informed marked.
Citing the latest news, Binance stated that they keep an internal ledger for each user’s assets. system of proof of reserve Said it could be verified. As for the misunderstanding of wallet movements, the stock market states that “we do not abuse collateral to pay hedge funds, as a news site claims”. corporate customers He stressed that it was a withdrawal process.