According to reports, the investment division of Binance, Binance Labs has achieved a high return on investment of up to 2,100% since its inception. Thus, Binance Labs‘ assets under management totaled $7.5 billion.
Binance Labs’ ROI Increased By 2,100%
In its statements, the platform declared to its users that its financial situation is extremely good. However, they added that they have enough capital reserves to cover day-to-day operations and weather any difficult cycle.
The platform also stated that all user assets on Binance‘s platform are supported in a 1:1 ratio. Finally, targeting FTX, whose founders are accused of embezzling user funds, Binance stated that it will not use such assets for any transactions or investments.
The Proof-of-Reserves Dilemma
Executing proof-of-reserve confirmations has become the crypto industry’s latest obsession since the FTX disaster. Binance has introduced a Bitcoin and Ethereum system based on the Merkle Tree. Other platforms such as OKX, Crypto.com, and ByBit have adopted a similar strategy in response to investors’ increasing demands for transparency from centralized exchanges around the world.
As of November 22, Binance had enough Bitcoin and Wrapped Bitcoins (WBTC) to cover all client balances on the platform, according to a report from international audit firm Mazars. However, some business experts noted that the report focuses on educating the public about supported assets rather than stated reserves.
The turmoil worsened after Mazars removed the website that hosts proof-of-reserves for cryptocurrency exchanges. However, the decision to cease operations does not always mean that the information in the reports is correct. This decision may mean that the audit firm does not want to take the risk associated with working on proof-of-reserves for cryptocurrency exchanges, especially in light of the publicized collapse of FTX.
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