In the face of alarming BNB Volatility, Binance has topped up its emergency Insurance Fund ‘SAFU’ with over $700 million to safeguard its funds.
Binance tops up SAFU fund
The world’s largest cryptocurrency exchange platform, Binance, has topped up its Secure Asset Fund for Users (SAFU) to an equivalent of $1 billion worth of various cryptocurrencies in response to increased market volatility. The platform’s new move was announced by its founder via a tweet earlier today, November 9, 2022.
According to the popular crypto expert and founder of Binance, Changpeng Zhao, popularly known as “CZ,” Binance is protecting its fund by topping up its token-related addresses with over $700 million in different tokens. In comparison, another bitcoin address was funded with $300 million.
“To adjust to recent price fluctuations, #Binance has topped up the #SAFU insurance fund to $1 billion USD equivalent again.”
CZ’s tweet was accompanied by links to two reserve accounts, one of which holds both the Binance stable coin (BUSD) and the native token of the network (BNB).
What is Binance’s SAFU fund
The Secure Asset Fund for Users, or SAFU Fund, is an emergency insurance fund established by Binance in July 2018 to protect its users’ funds. After establishing the fund, Binance committed a percentage of trading fees to grow it to a sizable level to safeguard users. The fund’s value fluctuates based on the market. Also, SAFU fund wallets comprise BNB, BUSD, and BTC.
Based on the opening price on January 29, 2022, the Secure Asset Fund was valued at US$1 billion. According to recent reports, the SAFU addresses hold over $700 million in Binance ecosystem token BNB and Binance USD (BUSD), a stablecoin. The bitcoin address holds over $300 million worth of BTC as of press time. Totaling about $1 billion USD in the SAFU accounts.
With the SAFU emergency insurance fund, Binance offers asset protection to its users in extreme circumstances. The company has pledged to monitor the fund on an ongoing basis to ensure the fund size remains adequate to protect users’ interests. Users can view the wallet addresses where the funds are stored.
Binance protects user assets amidst volatility crisis
The augmentation of the SAFU fund is one of the latest moves in the back-and-forth between FTX and Binance, which has unfolded over the last few days. As a result of the tension between the two market leaders, the crypto market has whipsawed in the past 24 hours amid volatile market dynamics due to speculations surrounding prominent exchange FTX’s liquidity issues. Speculation surrounding the Sam Bankman-Fried’s owned crypto exchange grew so intense that the firm agreed to sell itself to bigger rival Binance – sparking panic among traders.
Just yesterday, the value of Bitcoin dropped below $17k and has continued to plummet. The SAFU fund is Binance’s way of protecting its users’ assets amidst dwindling markets. Regarding the new development, Changpeng “CZ” Zhao, co-founder and CEO of Binance, stated:
“It’s our responsibility to protect our users while not only building the best and most secure platforms, but protecting them from any unforeseen issues. By providing the SAFU fund, we can give users some peace of mind.”
The crypto community on Twitter responded to the tweet with mostly positive reactions, applauding CZ for his action. Nonetheless, some others have questioned the sufficiency of the cap for funds in reserve.