Binance Seeks to Reassure Crypto World With Proof of Reserves

Crypto exchange Binance Holdings Ltd. on Wednesday released its first proof of reserves, based on a snapshot review by accounting firm Mazars.

The report shows the exchange having sufficient crypto assets to balance its total platform liabilities. It captures a glimpse of Binance’s bitcoin holdings at a specific moment in time to reassure customers that its assets and liabilities match. Mazars, which performed its review on Nov. 22, said it had verified that Binance’s assets were collateralized, existed on the blockchain, and were under the company’s control. It observed that Binance controlled assets in excess of 100% of its total liabilities.

The report also acknowledges the limitations of Mazars’ work—which didn’t amount to a true financial statement audit that would have given an indication of the company’s fiscal health and its ability to continue operating in the weeks and months ahead.

“Accordingly, we do not express an opinion or an assurance conclusion,” the firm said in its report. “Had we performed additional procedures, other matters might have come to our attention that would have been reported.”

• The report, from a Mazars partner in South Africa, was addressed to Binance Capital Management Co. Ltd. and a management company based in the British Virgin Islands. Mazars said it followed attestation standards set by the International Auditing and Assurance Standards Board to complete its work for Binance.
• The collapse of crypto exchange FTX has prompted calls for transparency in the crypto industry. Crypto exchange KuCoin on Dec. 5 said it appointed Mazars to perform a similar proof of reserves review of its own holdings.
• Global standard-setters haven’t yet come up with rules for crypto accounting.