NOTE: FalconX reached out to clarify that it never actually knew who the tokens belonged to. This article has been updated to reflect that.
FalconX, a crypto prime brokerage, has been holding onto 1.35 million Solana (SOL) tokens, worth $190 million, for years without knowing who it belongs it.
The tokens have been sitting with them since 2021. Now, Binance, the largest crypto exchange globally and a major liquidity partner of FalconX, is stepping up to claim ownership.
They’re demanding their assets back, and it seems FalconX doesn’t have much of a choice but to comply. The bigger concern here is how the brokerage managed to “misplace” such a huge amount of money.
On top of that, how did Binance, the rightful owner, also lose track of $190 million worth of tokens for years?
The situation exposes some serious concerns about the internal systems and controls of both companies, specifically regarding asset management.
$190 million left sitting around
FalconX first took custody of the tokens when their price was between $20 and $30 per token. At that time, the total value of the 1.35 million tokens was not nearly as much as it is today.
By late 2022, after the collapse of FTX, SOL’s value dropped below $10, reducing the overall worth of the pile of tokens.
Right now, Binance holds over $110 billion in reserves and serves more than 90 million customers globally, which perhaps explains why this chunk of assets slipped through the cracks.
When pressed for an explanation, FalconX admitted there had been “a reconciliation anomaly.”
According to them, they went through a process of reconciling their books with all their exchanges, clients, and partners, and no one showed any record of a transaction involving these tokens.
Binance, for its part, reassured us that its customers were never at risk. Had the tokens remain unfound, the exchange would have simply absorbed the loss.
How both companies are performing
Both FalconX and Binance confirmed the assets were being returned to Binance, and the matter had been fully resolved. “Binance and FalconX continue to operate business as usual,” they said in an email.
Interestingly, on the same day this issue came to light, Binance released its latest Proof of Reserves report. According to the report, its total reserves now stand at around $60 billion.
The report also highlighted some huge changes in asset holdings. Bitcoin reserves have grown by 5%, reaching around 500,000 BTC.
Similarly, Ethereum reserves increased by 7%, bringing their total to roughly 2 million ETH. As for FalconX, their numbers are looking strong too.
The company has been valued at $8 billion, thanks to a 2.5 times increase in revenue compared to the previous year.
This spike in growth is driven by a rise in trading volumes and an expanding roster of institutional clients.
FalconX just came off one of their best quarters, and they are now eyeing strategic acquisitions to further solidify their position in the crypto market.
But FalconX doesn’t take market risks, unlike other crypto firms. They align their strategies with their clients, most of whom are major institutions.
They claim that this risk-averse approach has helped build a solid reputation among their 600 institutional clients, backed by major investors like Tiger Global and GIC.
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