The crypto-market turmoil caused by FTX’s solvency concerns has blanketed the entire industry in fear. Influencers, traders, and investors are all scrambling to withdraw their funds from exchanges and place them in cold storage.
The unexpected developments in FTX’s case, from the CEO assuring users of the security of their funds to withdrawals being halted, are an unsettling reminder of the early days of the bear market. Especially when uninformed customers used to lose hundreds of millions of dollars.
Exchanges scramble to reassure users
In a bid to avoid a bank run-like situation, major exchanges have made announcements to calm down users. Earlier today, Coinbase CEO Brian Armstrong tweeted a detailed thread outlining the steps taken by his company to ensure the security of user funds.
Soon after inking a non-binding acquisition deal with FTX, Binance CEO Changpeng Zhao took to Twitter, calling for enhanced transparency among crypto-exchanges. This was followed by a commitment to implement proof-of-reserve in the spirit of full transparency.
Binance SAFU topped up to $1 Billion
Within a few hours of committing to full transparency, Binance CEO CZ announced that the exchange’s Secure Asset Fund for Users (SAFU) had been replenished, taking its holdings to $1 billion.
SAFU is an insurance fund that was set up by Binance back in 2018 to protect its users’ funds in case of an emergency. SAFU is funded by a percentage deducted from trading fees on the exchange and is made up of Bitcoin, BNB, and Binance’s stablecoin BUSD.
On 29 January 2022, the SAFU was valued at $1 billion. However, the events that transpired in the following months brought down the fund’s value. Today’s top-up includes $700 million worth of BUSD and BNB and $300 million worth of BTC.
Users on Twitter welcomed this move by Binance, in addition to the advocacy of proof-of-reserves. “Stay SAFU” has become a common warning by CZ in times of volatility and unrest.
