Understanding how wallet operations work can be difficult. And we've noticed the recent spread of misinformation on this topic. In the interest of transparency and education, we've published this new deep dive into our wallet management system.
Since the implosion of FTX, our industry has been subject to a lot of scrutiny. We get it. No company, particularly one that’s trusted with people’s money, should ever be allowed to operate with impunity. And, as the industry’s leading exchange, Binance has gotten its fair share of tough questions.
Before we get into the details, it’s important to note that our users are able to withdraw their funds whenever they wish – as has been demonstrated time and time again, even during times of heavy negative news like in December 2022. This would only be possible if user funds are managed conservatively and carefully.
The chart below is designed to give you a high-level insight into how user assets move on Binance. When a user deposits funds to our platform, they go to what we call aBinance periodically “sweeps” the funds residing in deposit wallets into. Hot wallets facilitate withdrawals such that, upon receiving a withdrawal request, our system sends the user funds from the hot wallet, simultaneously deducting the corresponding amount from their account balance.
In fairness, many of these reports, whether old or new, tend to focus on a period when the distribution of user funds, our own funds, and collateral funds between our wallets was not perhaps as straightforward as it could have been. This problem of clarity was further compounded by the frequent internal movement of funds between our multitude of wallets.
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