International audit firm Mazars has confirmed that crypto exchange Binance’s Bitcoin holdings are fully backed.
In a report published Wednesday, Mazars observed that the exchange, the world’s largest, had a net customer balance of 575,742 BTC with a collateralization ratio of 101% as of Nov. 22. This means that Binance’s assets exceed its total liabilities.
The assets used in the calculation were Bitcoin (BTC) and wrapped Bitcoin ( BTCB and BBTC) held on Bitcoin, Ethereum, BNB Chain and Binance Smart Chain.
Mazars assessed the firm’s Proof-of-Reserves and Proof-of-Liabilities through Merkle Proof – a verification process for identifying parts of cryptographic data in blockchain networks.
The figure documented in Mazar’s report matches the one shared by Binance in the last week of November. At the time, some market participants questioned the exchange for displaying its Proof-of-Reserve statement without documenting its corresponding liabilities.
Jesse Powell, co-founder of crypto exchange Kraken, said that showing a hash record of BTC held is “worthless without everything else.” Powell opined that the Merkle Tree method of calculating reserves is “just hand wavey bullsh*t” without an auditor confirming no negative balances were used in the process.
Binance CEO Changpeng Zhao responded to Powell, saying that independent auditors would soon clarify that the exchange has no negative balances and that Mazar’s confirmation on Wednesday would calm critics. The audit firm has also been employed by crypto exchange KuCoin to conduct a Proof-of-Reserve verification for its crypto holdings.