I couldn't image if Binance is bankrupt, how bad is the chaos affecting Bitcoin holder since most of people hold their funds in Binance.
Binance have already been caught running a fractional reserve system and not holding enough coins to cover all withdrawals:
https://bitcointalk.org/index.php?topic=5441480.msg62531977#msg62531977.
Proof of reserve my foot, the only time I'll believe a centralized exchange has a proof of reserve is when their reserve/insurance fund are in Bitcoin and held in a multisign offline wallet which they'll sign a message including the Bitcoin address which can be verified by everyone and we monitor the address constantly.
Even then, it proves nothing. So let's say Binance "prove" they have 500,000 BTC. How do we know that is everything they are supposed to have? How do we know that covers all customer deposits to Binance? We don't. It doesn't matter if they prove they are holding 500,000 BTC, if collectively all Binance users should be able to withdraw 750,000 BTC. Proof of reserves without proof of assets is meaningless.
Various exchanges have tried to do proof of assets as well, but it is completely trivial to fool by just having a handful of accounts with negative balances, which is exactly what FTX were doing as well. Alameda's account on FTX had a balance of negative $8 billion.
An example is crypto.com which withdrew about 280,000 ether ($400m) from its account after publishing its PoR audit report. The funds was transfered to Gate.io's address fueling speculations that the funds was just borrowed to deceive their customers.
Binance did the same, with a few billion in USDT being moved out the day after their so-called "audits". And the same thing again with Bitfinex propping up Tether just before their "audits". Every centralized exchange is the same.