Binance moves $2 billion of bitcoin as part of reserves audit

Binance has moved 127,351 bitcoin ($2 billion) to verify to an auditor it has control over the claimed address.

The transfer of such a large amount of bitcoin today from Binance to an unknown wallet led to questions among the crypto community regarding the nature of the transaction. In response, Binance CEO Changpeng Zhao clarified that the transfer is part of an ongoing audit at Binance. 

“This is part of the Proof-of-Reserve Audit. The auditor requires us to send a specific amount to ourselves to show we control the wallet. And the rest goes to a Change Address, which is a new address,” Zhao claimed. He added the exchange has rotated the funds to a new address in its control.

Last week, Binance officially introduced its first proof-of-reserves system, a prototype aiming to show that it holds the reserves necessary to cover all customer deposits. It's currently working on a more complete audit.

The pressure on centralized crypto exchanges to adopt “proof of reserves” has increased dramatically after the collapse of crypto exchange FTX. By publishing both the total amount of assets and liabilities, exchanges can indicate that they have the reserves on hand to meet customer withdrawal requests.  However, these initial reserves don't necessarily show the full picture, as they don't provide details on the exchange's liabilities.

Reserves can be shown in two ways or a combination of both. The first is by having the reserves audited by independent third-parties auditors whereas the second is by providing a list of public addresses that hold different assets, as noted by security firm Halborn. Each has different benefits and drawbacks.