It has been well established that like any financial industry, the crypto industry too was not free of bad actors. The repeated instances of hacks and scams have highlighted the negatives of the technology leading to many countries outrightly banning crypto. Binance has been a victim of such hacks and has also undergone regulatory scrutiny due to uncertainty in various parts of the world. Therefore, the exchange has kicked off a $1 billion insurance fund for its users amid the ongoing press of hacks.
As per Binance’s official memo, the exchange has been earmarking money for the emergency portfolio since July 2018 and only recently consolidated the funds into one place.
The exchange stated,
“Binance is announcing that it has updated its Secure Asset Fund for Users (SAFU) valued at $1 Billion. Users can view the Secure Asset Fund wallets on wallet address 1 and wallet address 2.”
The prominent exchange has been the center of many such attacks including the Binance Smart Chain [BSC] over the past couple of years. With this fund, it aims to combat concerns from users about such attacks. It also called onto other centralized exchanges to publish their insurance fund wallet addresses to benefit the ecosystem. It will also be a move to relay their commitment to upholding trust to the governments and other regulatory authorities.
It noted,
“Binance calls on all centralized exchanges to publish their insurance fund wallet addresses, as it will benefit the entire ecosystem and demonstrate to governments, regulators and important stakeholders our collective commitment to uphold trust, integrity and transparency in the crypto ecosystem.”
“Funds are safu” has been the only thing the platform users looked forward to in an event of an attack on Binance. Now that it was taking steps to secure its users, Binance may be able to impart some confidence among the users who still were on the fence. As per the CEO of the exchange, Changpeng Zhao,
“At Binance we always said ‘funds are safe,’ and today the Binance Secure Asset Fund size acts as an effective safeguard as well as protection for users against such unlikely issues.”
While security still may be a central issue here, such funds do offer some relief to the participants and could turn regulators relatively lenient towards crypto exchanges.