Binance expands user emergency insurance fund to $1 billion as FTX collapses
Binance is the world’s leading blockchain ecosystem and cryptocurrency infrastructure provider, especially now that FTX – one of its biggest rivals – collapsed following Binance’s CZ stunt of unloading all FTT (FTX’s native token) from its balance sheet.
Binance has topped up its Secure Asset Fund for Users (SAFU) to $1 billion at a time of great uncertainty within the cryptocurrency space following the fall of crypto exchange giant FTX.
Established in 2018, the SAFU fund acts as an emergency insurance fund which offers protection to Binance users in extreme circumstances.
Protecting users from any unforeseen issues
The fund is allegedly monitored on an ongoing basis to ensure its size remains adequate to protect users’ interests. Binance provides enough transparency to its users on that department, including allowing them to view the wallet addresses where the funds are stored.
Changpeng “CZ” Zhao, co-founder and CEO of Binance, said: “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.”
Binance is the world’s leading blockchain ecosystem and cryptocurrency infrastructure provider, especially now that FTX – one of its biggest rivals – collapsed following Binance’s CZ stunt of unloading all FTT (FTX’s native token) from its balance sheet.
Binance pulls out of FTX deal
FTX’s outflows reached a whopping $451 million. Over the same period, Binance’s net inflows amounted to more than $411 million. The $40 million gap constituted mass withdrawals from FTX customers.
Earlier this week, Binance offered to buy FTX for $1 in order to save the company and help cover the liquidity crunch, which Sam Bankman-Fried (SBF) agreed. The liquidity crisis is of concern within the space as it could affect and bring down other major players in the market, which reportedly led SBF to discuss with TradFi heavyweights to raise up to $1 billion in fresh funding.
The fresh capital injection, which was still subject to negotiations, would keep the crypto conglomerate at the same valuation it had landed after a $400 million funding round back in January. At the time, the cryptocurrency exchange founded by Sam Bankman-Fried was valued at $32 billion.
The deal with Binance could have stopped the bleading, but Binance’s chief executive pulled out last minute after finding out the acquisition deal would not include the US regulated entity FTX.US.
Binance announced via Twitter: “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com.”
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.
Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.
As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger.”
