Binance unveiled a proof-of-reserves system to show that exchanges are sound and capable of paying, and will start with Bitcoin, Double Rock reported on the 25th (local time).
Binance’s move comes weeks after rival exchange FTX filed for bankruptcy protection amid a liquidity crisis.
Binance aims to show that users’ assets are kept in the same tokens as they deposited through the reserve certification system, Double Rock said.
Regarding Bitcoin, Binance released a snapshot of its account balance and Bitcoin reserves. Binance currently holds 582,485 bitcoins as reserves. Binance users have a total of 575,742 bitcoins in Binance. The reserve is larger than the total amount of deposits made by the user. Binance also introduced a link where users can check their Bitcoin on Binance.
Binance plans to add more tokens and blockchain to its reserve certification system in a few weeks. The goal is to have external auditors participate in verifying the reserve certification system, protect user privacy, and implement zero-knowledge proof technology to cryptographically prove their claims.