The main point

  • Wrapped Binance tokens are always fully collateralized.

  • Sometimes in the past, collateral assets have been held in unknown cold wallets, or not moved quickly enough to the right hot wallet.

Subsequent blog posts and media coverage have raised questions about how Binance manages collateral for wrapepd tokens. While you can see here that we fully and even over-collateralize this asset, industry analysts and astute journalists have noticed that there have been on-chain discrepancies in the past. So, let's be clear.

First, as an introduction to the terminology for you, if necessary: ​​“Wrapping” tokens is blockchain terminology for the creation of multiple versions of an original asset that can be moved to other chains to increase the interoperability and interconnectedness of the digital asset space. Typically, the value of a wrapped token is secured by locking the original asset as collateral, for example Binance-Peg BUSD. For more details, please see this article: Understanding BUSD and Binance-Peg BUSD.

Binance Assets Fully Supported

The most important thing to note is that assets on Binance are always fully collateralized. Assets are backed 1:1 and users are always free to withdraw their assets whenever they want, as has been proven time and time again.

Having said that, on-chain data highlighted by third parties shows that hot wallet administration is not always perfect. The simple fact is that collateral assets have sometimes been stored in unknown cold wallets, or not moved quickly enough to the right hot wallet. This may give the impression that these wrapped tokens are sometimes not adequately secured, as the 1:1 backing is safely stored in different wallets.

This is a great example of the inherent transparency of blockchain and the way the community works together to build trust. This issue has been addressed by our team to ensure best practices moving forward. As a result, over the coming weeks and months, users will see the wallet updated on the Proof of Collateral page for B-Token to further increase transparency.