Mazars Put Binance’s Bitcoin Coverage at 101%—Within a Narrow Test

Mazars issued an agreed-upon procedures report for Binance on December 7, 2022, finding that the exchange’s in-scope bitcoin assets covered 101% of the corresponding net customer liability after specified margin and loan collateral was included.

The result was narrower than the shorthand “audit” circulating around the market. Binance commissioned the work, agreed the procedures with Mazars and remained responsible for the underlying subject matter. Mazars explicitly said the engagement was not an assurance engagement, expressed no audit opinion or assurance conclusion, and was not subject to independence requirements.

That distinction mattered in the weeks after FTX Trading filed for Chapter 11 protection on November 11, 2022. Centralized exchanges were under pressure to show that customer balances were matched by assets they controlled. Binance’s report supplied a testable snapshot for one asset group. It did not supply a complete view of the company’s finances.

What the snapshot measured

The measurement time was November 22, 2022, at 23:59:59 UTC—15 days before the report date. “In-scope assets” meant BTC plus wrapped forms BBTC and BTCB held for customers across spot, options, margin, futures, funding, loan and earn accounts. The procedures covered addresses on Bitcoin, Ethereum, BNB Chain and Binance Smart Chain.

The appendix reported a customer-liability balance of 597,602.29 in-scope units. After excluding in-scope assets lent to customers, the net liability balance was 575,742.42. Binance’s asset-balance report showed 582,485.93. Mazars reported 97% collateralization before counting out-of-scope assets pledged by customers against margin and loan borrowing, and 101% after including that collateral.

Those percentages were findings under the report’s own definitions, not Coinburn estimates. The higher ratio depended partly on a management-supplied listing that valued collateral outside the BTC-focused scope. The report did not publish a complete breakdown of that collateral in the appendix.

What Mazars checked

Mazars obtained asset-balance reports and wallet addresses from management, retrieved balances from the relevant blockchains and compared the totals. It reported no variance greater than 1% between blockchain balances and the supplied asset reports.

To corroborate control, the firm used combinations of extended-public-key links, instructed transfers and explorer address tags. Some Ethereum and BSC addresses were checked only through Etherscan or BscScan tags rather than an instructed movement of funds.

On liabilities, Mazars inspected the scripts management used to extract customer balances, observed management run them, and performed row-count and sum checks. It also reported no duplicated user IDs in the original or truncated hashed datasets. A Merkle root let individual customers test whether their balance was included in the aggregated liability set; it did not let them independently reconstruct every corporate liability.

A transparency tool, not a solvency verdict

The report established that specified assets and customer balances matched under agreed procedures at one timestamp. It did not test Binance’s full balance sheet, all tokens, off-balance-sheet commitments, internal controls, segregation of customer and company assets, or the exchange’s ability to meet withdrawals after November 22.

The institutional significance was therefore methodological. The crypto industry was experimenting with on-chain reserves and Merkle-tree liabilities as a response to a trust crisis, while the December 7 document itself showed why those tools could not replace a financial-statement audit.

Later context

On December 16, 2022, Mazars removed its crypto proof-of-reserves pages and paused that work, citing concern about public understanding of the reports. In March 2023, the U.S. Public Company Accounting Oversight Board separately warned that proof-of-reserve reports are not audits and do not provide meaningful assurance about an entity’s ability to meet liabilities. Those later developments sharpen the limitation already written into the December 7 report; they do not alter what the report found at its November 22 snapshot.