In the wake of FTX’s insolvency-driven turmoil in the market, Binance boosted its SAFU fund to about ~$1 billion. This was announced by the platform’s CEO, Changpeng Zhao.
To adjust to recent price fluctuations, #Binance has topped up the #SAFU insurance fund to $1 billion USD equivalent again.
BUSD AND BNB address about 700m: https://t.co/OMoB6HeR6r
BTC address 300m: https://t.co/6kOJ1MZhMM
Transparency. 1/2
— CZ 🔶 Binance (@cz_binance) November 9, 2022
Of this amount, about $300 million is held in Bitcoin, the remaining $700 million is in BNB and BUSD.
Total top-ups amounted to about $215 million — 194,500 BNB (~$62 million) and 8,325 BTC (~$153 million).
“We are responsible for protecting our users, … safeguarding them from any unforeseen problems. By creating the SAFU fund, we provided clients with some peace of mind,” — said the exchange’s head.
In addition to protecting users’ interests, SAFU includes three key components for broad adoption: trust, honesty and transparency, according to a press release.
Binance established this fund in 2018. It was used, among other things, to compensate $40 million of stolen cryptocurrency in 2019. The fund receives a share of user-paid fees. The assets are stored in BNB, BUSD and BTC.
As of the end of January 2022, the fund stood at $1 billion. Amid worsening market conditions, the figure fell to $735 million.
The day before Zhao pledged to confirm reserves for Binance.
“All crypto exchanges should verify their reserves [using] Merkle tree. … Binance will soon begin to verify reserves. Full transparency,” Zhao wrote.
The decision followed the announcement of a strategic partnership between the platform and competitor FTX with an option for its potential acquisition. Zhao accompanied it with the assertion that platforms must maintain larger reserves and not rely on their own token for collateral.
Earlier, Circle CEO Jeremy Allaire compared the FTX crisis to the collapse of Lehman Brothers. The top executive urged the industry to move from speculation to a “phase of usefulness” that depends on greater transparency.
On November 6, Zhao said that the company aimed to exit the FTX utility token (FTT). Assets, together with BUSD, totaling about $2.1 billion, were the result of the company’s exit from its portfolio investment in Sam Bankman-Fried’s platform Sam Bankman-Fried.
At the time, the Binance chief stressed that the move was not aimed at a competitor but followed recent disclosures. He is believed to have referred to CoinDesk’s investigation, which disclosed details of Alameda Research’s balance sheet, closely tied to FTX.
On November 8, FTT fell by almost 30% amid concerns about the exchange’s financial stability. At the same time, Bitcoin’s price fell below the $20,000 level, dragging the rest of the market down.
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