Binance pledges $6.34 billion to make users whole as reserve data shows a gap
The exchange says it holds about $5 billion in the same tokens that were stolen, while its own reserve figures suggest ether backing is short until losses are replaced.
Binance says it has $6.34 billion of its own money ready to cover the losses from this week’s hack. Its own public reserve data, however, shows the hack hit wallets that back customer balances.
What happened
The exchange said it has set aside more than $6.34 billion to cover user losses, including about $5 billion held in the same tokens that were stolen. It said these assets will be included in its next proof-of-reserves report. Industry partners have also frozen roughly $3 billion of the stolen assets.
Binance’s reserve data lists the drained wallets as backing customer balances. Based on those figures, the exchange’s ether backing is estimated to be about 6% short until it replaces what was taken.
Background
Proof of reserves is the way large exchanges try to show they hold enough assets to cover what customers have deposited. They publish wallet addresses and balances, often alongside a cryptographic check that individual customers can use to confirm their balance is included.
A shortfall in one asset does not mean an exchange is insolvent. It does mean customer deposits in that asset are not fully backed one-to-one until the gap is closed, which is why Binance’s plan to fill it with matching tokens matters.
Why it matters
Matching tokens are a cleaner fix than cash. If Binance replaces stolen ether with ether, rather than with dollars or other coins, customer balances are restored like for like, without the exchange having to buy large amounts on the open market.
The next proof-of-reserves report is the real test. It should show whether the promised funds have actually moved into the wallets that back customer deposits.
Written by Tech Security with AI assistance. Not financial advice. See our disclaimer.