Summary
- Binance appears to have used about half of its user protection fund (SAFU) to cover losses from a major hack.
- Binance said it would use the SAFU fund, corporate assets and its futures insurance fund to cover losses from the $6.3 billion hack and restore the SAFU fund to about $1 billion.
- But Binance has not disclosed the replenishment standard for cases in which the SAFU fund is used for actual compensation, a timeline for restoring the fund, or how much was drawn from the futures insurance fund.
Forecast Trend Report by Period
Binance appears to have used about half of its user protection fund to cover losses from a major hack.
CoinDesk reported on Nov. 3 that Binance’s official Bitcoin wallet for its Secure Asset Fund for Users, or SAFU, held about 7,500 BTC as of that day. The balance fell sharply after four transactions on Oct. 31.
Binance accumulated 15,000 BTC in February after converting its roughly $1 billion SAFU fund from stablecoins into Bitcoin. The current balance is about half that amount. At a Bitcoin price of $77,000, the remaining holdings are worth about $580 million.
SAFU is an emergency fund set aside to compensate users when unexpected incidents such as hacks damage customer assets. Binance’s policy is to restore the fund to about $1 billion if its value drops below $800 million due to swings in Bitcoin prices.
That rule, however, applies to declines in asset value caused by falling Bitcoin prices. It does not specify how the fund should be replenished when it is used for actual compensation.
Binance said on Oct. 31 that it would use part of the SAFU fund to cover losses from a hack worth about $6.3 billion. It also said corporate assets and its futures insurance fund would be used to make up the losses, and pledged to restore SAFU to about $1 billion.
The company has not disclosed a timetable for replenishing the fund. It also has not said how much was actually drawn from the futures insurance fund.
