South African auditing firm Mazars has confirmed that cryptocurrency exchange Binance is “101% collateralized”, with Bitcoin reserves valued at around US$9.7 billion at the time of publication.
In the aftermath of the FTX collapse, Binance launched a proof-of-reserves website two weeks ago as a reassurance for its customers.
The crypto exchange confirmed that its users collectively held 575,742.4228 BTC and that it has enough BTC and wrapped BTC to cover the funds.
Subsequently, the exchange then contacted Mazars so that the auditing firm could independently verify its report.
The scope of the inquiry included customers’ spot, options, margin, futures, funding, loan and earn accounts for Bitcoin and wrapped Bitcoin (WBTC).
Aside from the Bitcoin network, BTC wrapped on Ethereum, BNB Chain and BNB Smart Chain.
As part of its proof-of-reserves pledge, Binance requested an agreed-upon procedures (AUP), or an audit that is limited in scale.
As part of #Binance’s user fund transparency work and Proof of Reserves updates, we're working with digital assets experts at global financial audit, tax and advisory firm, @Mazars_SA.
The first report from Mazars about Binance’s $BTC Proof of Reserves has been published today.
— Binance (@binance) December 7, 2022
Mazars statement
In its audit report, Mazars stated: “We make no representation regarding the appropriateness of the AUP.
"This AUP engagement is not an assurance engagement.
“Accordingly, we do not express an opinion or an assurance conclusion.
“Had we performed additional procedures, other matters might have come to our attention that would have been reported.”
You can read the full report on #Binance's #BTC Proof of Reserves below.
Stay tuned as other tokens will be coming soon.
— Binance (@binance) December 7, 2022
Audit procedure
As disclosed in its procedures, Mazars independently obtained the nominal value of Binance customers’ assets by testing a variety of wallet addresses controlled by the exchange.
The auditors requested the exchange to transfer assets to designated addresses and back in order to verify proof of ownership.
In addition, the firm used its software to aggregate client data it obtained and computed the Merkle Root Hash.
This allowed Binance’s clients to verify their Merkle Leaf independently and cryptographically as being part of the Merkle Root.
Mazars added: “We have complied with the relevant ethical requirements.
“For the purpose of this engagement, there are no independence requirements with which we are required to comply.”