Panic ensued after 127,351 BTC, worth over $2 billion, was moved from Binance to a cold wallet. As of when this article was first published, Binance had released a statement to explain why users saw the transfer. It hinted that they would see more similar transactions but their funds are safe.
“As part of our Proof of Reserves (PoR) process, #Binance is working with a 3rd party auditor to provide proof of ownership. You will likely see some large transfers between #Binance’s owned wallets throughout the day as a result of this. Funds are SAFU,” the company tweeted. SAFU here means safe, although, it could also refer to Secure Asset Fund for Users, a monetary fund created by the company which holds 10% of all trading fees to indemnify customers in case the exchange is hacked.
The tweet came a bit late as crypto owners and enthusiasts had begun tweeting about the meaning of the transfer. Given the recent crash of similar exchange platform FTX and the overall meltdown of digital currency value, people were right to panic.
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Although, before now, Binance CEO Changpeng Zhao has been making media rounds to reassure investors and users. He was also on hand to give more insight into the tansaction.
“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!,” he said. FUD here means fear, uncertainty and doubt, a scare tactic.
Despite the reassurances, there were still a few who were not convinced. Some mentioned that FTX had given a similar explanation as to why it was moving large funds before it collapsed. In reply to the doubters, Zhao had said that life is not easy. Suggesting that people had to make the hard choice of trusting Binance or not.
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