Binance has introduced a zero-knowledge proof (ZKP) verification layer to its proof-of-reserves system, enabling users to independently verify the exchange’s latest asset snapshot. The move comes after Binance disclosed a security incident in October, and follows the exchange’s commitment to replenish lost assets with substantial corporate funds.
New verification process covers 198 tokens
On November 14, Binance stated that its revamped proof-of-reserves solution now lets users verify whether their assets are backed on a 1:1 basis. The proof system covers 198 cryptocurrencies, with publicized reserve ratios for Bitcoin, Ethereum, BNB, USDT, USDC, and Solana. These figures show BTC reserves at 100.05%, ETH at 100.02%, BNB at 100.39%, USDC at 100.07%, USDT at 104.34% and SOL at 105.86% against respective customer liabilities.
A snapshot that underpins these ratios was taken on November 12 at 08:00 UTC+8. Binance explained that generating the zero-knowledge proof for all supported tokens was expected to require between 40 and 50 hours, emphasizing that the published ratios only apply to the six highlighted assets.
Binance, one of the world’s largest cryptocurrency exchanges by trading volume, clarified that proof-of-reserves only provides evidence of user asset custody at a single point in time and does not equate to a full corporate audit. The proof primarily demonstrates backing for customer deposits, not Binance’s overall financial health.
Binance’s system combines a Merkle Tree to show a user’s account inclusion, and a zk-SNARK to verify at least 1:1 asset backing, all while safeguarding individual balance privacy.
Mini dictionary: Zero-knowledge proof (ZKP): A cryptographic technique allowing one party to prove to another that a specific statement is true without revealing any other information. ZKPs are widely used in blockchain for privacy and verification purposes, and zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) are a type of ZKP designed for efficiency in blockchain applications.
Incident prompts system overhaul and massive reimbursement
The new zero-knowledge layer follows a major security breach reported on October 29. Binance initially estimated $6.3 billion in losses, after investigating signs of a compromised DevOps engineer’s device. By November 3, the company reported having rebuilt its wallet infrastructure, upgraded device security, revoked affected credentials, and enhanced internal controls.
On November 13, Binance committed more than $6.34 billion of its corporate funds to replenish assets hit by the breach. The exchange has also stated intentions to restore its Secure Asset Fund for Users (SAFU Fund) to approximately $1 billion. Withdrawal services have been restored in phases, targeting a complete roll-out the following week.
Withdrawal restoration and asset replenishment represent separate aspects of Binance’s response, aiming both to restore user account access and to ensure asset backing for affected balances.
The verification tool is designed so customers can independently check inclusion in the asset snapshot without exposing their account balances. Binance said this proof uses both a Merkle Tree structure and zero-knowledge cryptography.
Market response and ongoing risks
Binance published its updated reserves during a widespread cryptocurrency selloff on November 14. At 17:13 UTC, Bitcoin traded at $65,150, reflecting a 5.18% decline over 24 hours. ETH fell 5.82% to $1,817.54, while BNB dropped 7.28% to $585.25. Solana declined 9.2% to $72.31. The exchange’s reserve update was not directly linked to market moves, which mirrored broader sentiment.
| Asset | Price at 17:13 UTC | 24-hour change |
|---|---|---|
| Bitcoin (BTC) | $65,150 | -5.18% |
| Ethereum (ETH) | $1,817.54 | -5.82% |
| BNB | $585.25 | -7.28% |
| Solana (SOL) | $72.31 | -9.20% |
The Crypto Fear & Greed Index stood at 13, signaling “Extreme Fear” in the market. While Binance’s updated proof-of-reserves may bolster transparency, users are still exposed to various operational, cyber, regulatory, and market risks. The new cryptographic proof does not guarantee safety of funds or immunity from future incidents.
Next steps for users and the exchange
Moving forward, Binance users are expected to verify their inclusion in the reserve snapshot, check relevant dates, and understand the distinction between customer assets and Binance’s full balance sheet. The final restoration phase for withdrawals is awaited, along with potential further updates on the SAFU Fund.
On November 12, the FBI said it had seized over $1.2 billion in cryptocurrency reported stolen from Binance, and government and private-sector freezes had reached $2.7 billion. Authorities stated these amounts reflect seizure efforts, not total recovery of stolen assets.
While Binance’s zero-knowledge solution may advance transparency for customer deposits, it does not replace external audits or regular incident reporting. The effectiveness of these measures depends on both publication of regular proofs and user capacity to perform independent verification.
