The team at CryptoQuant, one of the leading on-chain data and analytics providers, has dug deep into the proof-of-reserves report shared by the leading crypto exchange, Binance.

Binance Customer Balances Collateralized at a 101% Ratio

According to the CryptoQuant team, customer deposits on Binance are collateralised at a 97% ratio on the exchange. The collateralisation increases to 101% when they factor in the Bitcoin lent out to customers.

CryptoQuant also compared the liabilities presented by Binance in their proof-of-reserve report with their in-house on-chain metrics and determined that the data was accurate by 99%.

Binance Has a ‘Clean Reserve’

Also, the CryptoQuant team observed that Binance had a ‘clean reserve’ which meant that its own Binance Coin (BNB) ‘is still a low proportion of its total assets.’

In particular, CryptoQuant says that 89% of Binance reserves are ‘clean’ compared to Huobi at 56%, Bitfinex at 66%, KuCoin at 81%, Crypto.com at 97%, 100% for OKX and Deribit, and Bybit at 95%.

No ‘FTX-like’ Behaviour With Binance Reserves

In addition, CryptoQuant said that on-chain data suggests that ‘Binance’s ETH and Stablecoin reserves are not showing ‘FTX-like’ behaviour at this point.’

The team explained that the growth of reserves on Binance seemed more organic, with fewer fluctuations than those observed with FTX. They pointed out that the Sam Bankman-Fried-led exchange had many inflows and outflows to non-FTX wallets, and its reserves had dropped significantly days before its eventual collapse.

Furthermore, since FTX filed for bankruptcy, Binance’s BTC reserves have increased by 4%, but those of Ethereum and stablecoins have decreased by 6% and 15%, respectively.

‘Of course, we are not implying that erratic movements automatically mean an exchange is not well collateralised, but it can tell us something about their wallet management practices and the difficulty for on-chain data providers to make a better estimation of reserves,’ the CryptoQuant team added. ‘Reserves that move in an “orderly” fashion give us more confidence. We should continue to monitor Binance reserve lows.’

(By John P. Njui)