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Is Binance hiding something?

New report on Binance's bitcoin reserves raises questions about transparency. Is the exchange hiding something? Find out more inside.

Binance's Bitcoin Reserves Report Leaves Questions Unanswered

In Brief

  • The Paris-based audit firm Mazars released a report into Binance’s bitcoin reserves on Dec 7.
  • However, the report is not a full audit, and leaves many questions unanswered.
  • BeInCrypto approached many concerned observers for comment. Nobody would speak on-the-record.

What is the report about?

Following the collapse of Sam Bankman-Fried’s FTX exchange, transparency and restoring confidence have become an industry priority. On December 7, the auditing firm Mazars released a report commissioned by Binance that appears to show that its bitcoin reserves are fully collateralized. But the document does not show the full picture.

What's wrong with the report?

Whilst some reporting has referred to the report as an audit, it is not one. The report is an AUP (Agreed Upon Procedure) which is neither a full audit, review nor an assurance engagement. According to the International Auditing and Assurance Standards Board, an assurance engagement is:

“…an engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.”

The report itself explicitly states:

“This AUP engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported”

In short, by the professional standards of the industry, Mazars is not expressing broad confidence in the exchange’s finances. Mazars is simply checking against a pre-agreed set of criteria. Even if this were a report into all of Binance’s holdings – and not just BTC, BTCB, and BBTC – it would not be a financial bill of health. If this was a full audit, believe me, Binance would tell you. They haven’t. But they are probably pretty happy for you to believe that it is.

What are the other problems with the report?

Another eyebrow-raising move is the decision to bundle BTC and Binance’s wrapped forms (BBTC and BTCB) together. The report states that they will “not differentiate” between them and they will be “assessed interchangeably”. For full confidence, these assets need their own separate reports. A knowledgeable source told BeInCrypto: “This report alone is not enough to give anyone comfort on the existence of the assets. Several other procedures would need to be performed and compiled into their own reports. If anyone were to suggest that this report was sufficient to prove the existence of all the assets, then I would take that as a yellow flag.”

It’s Only A Snapshot The report is also only a snapshot of Binance’s BTC, BTCB, and BBTC at a specific time. In this case, at 23:59:59 UTC on the 22nd of November 2022. Theoretically, if Binance were trying to hide something, they could temporarily resolve their books before the report time. This does not mean Binance is doing anything illegal or manipulating its reserves. But it does mean we do not have the full picture.

What is Binance planning to do?

On Twitter, CZ said Binance were planning on a full independent audit against their reserves. He also confirmed that other coins would be looked at in time. He did not state whether this would be a full audit or another AUP. “Liabilities are harder,” he said. “We don’t owe any loans to anyone, you can ask around.”

The question is: why isn’t Binance choosing the path of maximum transparency?

What's the impact?

The report is unlikely to reverse the crisis of confidence in crypto exchanges, which has collapsed in recent weeks. According to research by Coinjournal, over 200,000 bitcoins have been withdrawn from exchanges, following the devastating FTX collapse. Beating the 128,000 bitcoins that were pulled from exchanges following Celsius’ insolvency in June.

Who is Mazars?

Mazars is not one of the Big Four accounting firms and is not registered with the Public Company Accounting Oversight Board (PCAOB). In fact, it is not even registered with the Securities and Exchange Commission (SEC) to carry out audits of publicly traded companies in the United States.


The report released by Mazars on Binance’s bitcoin reserves is not a full audit and leaves many questions unanswered. It is an AUP, which is neither a full audit, review nor an assurance engagement. The report also only shows a snapshot of Binance’s BTC, BTCB, and BBTC at a specific time, and does not differentiate between them. The report is unlikely to reverse the crisis of confidence in crypto exchanges, and Binance has not yet confirmed whether it will carry out a full audit.