Transparency in Binance wallets
I want to take this opportunity to answer some follow-up questions from the community about how funds and wallets are managed on Binance.
First of all, two fundamental facts:
Binance maintains all of its clients' cryptocurrency assets in accounts segregated from accounts and cryptocurrencies belonging to Binance.
Binance uses its own e-wallet infrastructure to protect users' assets and its own assets.
Let's go into detail.
Cold, hot and deposit wallets
Firstly, it is important to understand how Binance e-wallets work. There are deposit wallets, one (or more) addresses per user and per blockchain. You deposit to your deposit address. Our system monitors the blockchain and adds that balance to your Binance account.
Once they have been verified on the blockchain, you can trade those coins or spend them on Binance as you see fit. Those cryptocurrencies may or may not move from that address immediately. Binance “sweeps” those cryptocurrencies periodically to a hot (or cold) wallet. The logic that exchanges follow to sweep cryptocurrencies is to minimize the number of transactions and keep gas fees to a minimum, thus drastically reducing user fees in general.
To learn more about hot or cold wallets, check out this article from Binance Academy.
Larger quantities are generally swept up more quickly. We may wait for some deposits to be completed to sweep small amounts or wait until network gas fees are low to sweep. One of the main reasons we remain so competitive is because of methods like this, which keep gas fees low. These savings are then passed on to our users with some of the lowest trading fees in the industry.
When users want to withdraw money, our system sends them funds from hot wallets and deducts the amount from their account balance. If the hot wallet falls below a certain amount, we replenish it from the cold wallet.
If too many funds accumulate in the hot wallet from sweeping, we will move some funds to a cold wallet and process future sweeps directly to the cold wallet to, again, reduce the number of transactions as well as gas fees.
There are certain exceptions when a large deposit arrives. In this case, we can sweep directly to the cold wallet. And when a large withdrawal is requested, we can process it directly from a cold wallet.
In that context, I hope you see that, apart from the cases of deposits and withdrawals, the sweeping and movement of funds between cold, hot and deposit wallets are completely independent of updates to the user's account balance.
Operating funds
When users trade on Binance, a small commission is deducted from each trade and transferred to a Binance account. That's Binance's revenue, which we use to pay operating costs, servers, suppliers, and our employees.
The amounts that we do not spend (earnings) are saved in this account. Binance started making profits on its trading four months after it was founded and has also made profits in the two bear markets we have experienced.
Binance invests significant Ecuador Mobile Number List resources in ensuring full compliance with all laws and regulations to which it is subject.
Consequently, Binance holds all of its clients' cryptocurrency assets in accounts segregated from its own assets. More specifically, Binance maintains “customer balances,” internal accounting (or ledger) entries within the Binance system that record customers' rights to cryptocurrency assets.
Every Binance customer has an account/ID. User ID, which is a ledger-based (off-blockchain) account (or sub-account) within the Binance system with a unique identifier (User ID) and associated login credentials, with which record customer balances.
This ensures that Binance always records cryptocurrency assets belonging to its customers and distinguishes them from cryptocurrency assets owned by Binance. Binance conducts a daily review of all cryptocurrency assets it holds on behalf of its clients.
We only spend our own funds. We do not use client funds to trade on our own account.
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In line with our commitment to ensuring full legal and regulatory compliance, Binance has also begun proactively working to build segregated customer cryptocurrency asset e-wallets on the blockchain in Europe in order to meet this requirement under the Regulation. Mica.
Why do we use Binance e-wallet infrastructure to protect users' assets and Binance assets?
As one of the largest asset gatekeepers in the world of cryptocurrencies, security tops our priority list. To do this, we spend hundreds of millions of euros on security: we hire the best and use the best technology. It is one of the largest investments we make each year.
We believe our e-wallet infrastructure is one of the most secure in the industry and that Binance is the best place to protect cryptocurrencies.
We have considered the option of using third-party e-wallet software. However, we have looked at other e-wallet providers and are much more confident in the security of our own ecosystem than what we have seen from other providers.
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