Binance’s Exchange Balances vs Proof-of-Reserves, A Complete Report

Off lately, crypto exchange Binance has been on the radar as the FTX collapse puts investors on a high alert. The crypto exchange recently provided its Proof-of-Reserves report audited by accounting firm Mazars. However, some market players complained that it doesn’t offer a picture of the exchange’s financial health.

On-chain data provider Glassnode has dug further into the matter to look into Binance’s exchange balances and compare it further with its proof-of-reserves. Explaining the difference between exchange balances and Proof-of-Reserves, Glassnode explains:

“Exchange Balance metrics do present is our best estimate of the true balance held on each exchange, quantified as closely, and as verifiably accurate as possible. In contrast, Proof-of-Reserves metrics track only the balance of a (small) set of addresses which are publicly disclosed by the respective exchange”.

In their report, Glassnode has already included the Proof-of-Reserve addresses in the exchange balance metrics.

Binance Exchange Balances Vs PoR

As per the Glassnode data, Binance’s total Bitcoin holdings stand at 584.6k $BTC against the 359.3k $BTC in self-reported Proof-of-Reserves wallets. 

Glassnode further explains that there’s greater volatility in the Binance exchange balances this month. They added:

If we look to $BTC inflow/outflows, we can see there have been significant withdrawals of late. 13-Dec recorded 57.3k $BTC in outflows, and the largest net $BTC outflow from Binance in history.

Looking the same for Ethereum, the exchange balances and Proof-of-Reserves are effectively the same around 4.65 million ETH. Relatively, this data brings better confidence in Binance’s reporting.

The flows for ETH in December have been typically stable with one exception. There was a very large 1-day outflow of 456.7k $ETH on 13-Dec. However, the stablecoin outflows have been quite sizeable. 

Glassnode notes: “For stablecoins, there has been around $3.2B in combined outflows of $USDT, $USDC, $BUSD, and $DAI from Binance over the last 30-days. Across all exchanges we track, total outflow is $4.8B. This means Binance accounts for 66% of stablecoin outflows, ~in line with market share”.