Binance CEO explains 127K BTC transfer, points to proof-of-reserve audit


Cryptocurrency exchange Binance is moving large amounts of cryptocurrency as part of its proof-of-reserve (PoR) audits, according to its CEO, Changpeng “CZ” Zhao.

Binance sent 127,351 Bitcoin (BTC), or more than $2 billion, to an unknown wallet on Nov. 28, Whale Alert reported on Nov. 28. According to on-chain data, the transaction occurred at 10:00 am UTC, costing Binance a fee of just 0.000026 BTC ($0.42).

The huge Bitcoin transaction immediately triggered FUD — fear, uncertainty and doubt — among the community, with many noting that Binance moved an entire fortune’s worth of BTC in one single transaction.

CZ subsequently took to Twitter to announce that the massive transaction was part of Binance’s PoR audit process. He also called on the community to keep calm and ignore the FUD, stating:

“The auditor requires 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.”

The CEO also referred to an old tweet he posted four years ago, calling on the crypto community to “learn about blockchain transactions” and “change addresses.”

“We will be moving some funds between our cold wallets. A tell tale sign of a new cold wallet on Binance is two small transfers from and back an existing wallet, then a large transaction. No need to be alarmed,” CZ wrote in a tweet in October 2018.

In response to growing concern in the replies, the Binance CEO posted another tweet, arguing that investors who “believe FUD all the time” are also “likely to be poor.”

The latest Binance transaction has apparently raised the eyebrows of investors, as CZ himself earlier declared that it’s bad news when exchanges move large amounts of crypto to prove their wallet address. On Nov. 13, CZ tweeted

“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. Stay #SAFU.”

Binance‘s large transaction comes shortly after former Kraken CEO and co-founder Jesse Powell argued that Binance’s PoR approach was “pointless” without liabilities.

Related: CoinMarketCap launches proof-of-reserve tracker for crypto exchanges

A number of industry experts, including DAO Maker’s Hassan Sheikh and Jan3 CEO Samson Mow, are also confident that exchanges’ PoR practices are useless without liabilities because it’s very difficult for exchanges to fake liabilities.