Changpeng Zhao, the CEO of Binance, claimed that moving $2B worth of Bitcoin tokens out of the exchange was a part of Binance’s Proof-of-Reserves (PoR) audit.
Binance sent 127K to an unknown wallet on November 28, which led to the crypto community speculating about the reason behind Binance transferring such a huge amount of BTC.
This is part of the Proof-of-Reserve Audit. The auditor require us to send a specific amount to ourselves to show we control the wallet. And the rest goes to a Change Address, which is a new address. In this case, the Input tx is big, and so is the Change. Ignore FUD! https://t.co/36wUPphIZk pic.twitter.com/2NkH5L5J9j
— CZ Binance (@cz_binance) November 28, 2022
However, CZ soon tweeted that Binance was asked by its PoR auditor to transfer a specific amount to verify that the exchange owned the wallet. He added,
“The rest goes to a Change Address, which is a new address. In this case, the Input tx is big, and so is the Change.”
Interestingly, the news came just a few days after CZ cautioned users against exchanges that make large transactions to verify their wallet addresses. In his words,
“If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away.”
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Binance released its prototype Proof-of-Reserves system on November 25. So far, it only provides details about the exchange and its users’ Bitcoin holdings.
Binance is slated to add support for PoR audits of other coins in the coming weeks. In addition to improving privacy by implementing ZK-SNARKS, Binance also plans to allow third-party auditors to review the PoR results.
Changpeng Zhao also said that Binance will soon carry out similar transactions on all cold wallet addresses. He noted,
"Some won’t trigger a whale alert. It all depends on the input address."
