Crypto Insurance Funds Soar Amid Bull Market with Binance & Bitget Leading the Surge
Summary:
The Secure Asset Fund for Users (SAFU) at Binance and Bitget's protection fund have seen their values skyrocket in the ongoing crypto bull market, with data from April 3 showing a leap from $1 billion to $2.03 billion for Binance since January 2022, and a surge from $300 million to $612 million for Bitget. Several cryptocurrency exchanges opt to keep their on-chain addresses concealed due to cybersecurity threats, or intentionally misleading practices as in the case of defunct exchange, FTX. Some jurisdictions, like Hong Kong, now require crypto exchanges to provide up to 50% insurance coverage for their clients' fiat and crypto assets.
The value of leading cryptocurrency exchanges' insurance funds have seen an upward trend of over $1 billion in line with the persisting bull market in the crypto sphere. As of April 3, crypto exchange Binance's Secure Asset Fund for Users' (SAFU) comprised of Bitcoin (BTC), Binance Coin (BNB), Tether (USDT), and TrueUSD (TUSD), has risen to $2.03 billion, a significant increase from the $1 billion reported in January 2022. Additionally, Bitget's initial protection fund valued at $300 million during its November 2022 launch has nearly doubled to $612 million, a direct result of their Bitcoin possession appreciation. Over the past year, Bitcoin has registered a gain of 136% and BNB 79.36%, indicative of a flourishing bull run.
Among exchanges that offer user-centric insurance coverage, only Binance and Bitget have so far revealed their on-chain addresses. Back in 2019, the crypto exchange Huobi, currently known as HTX, unveiled a 20,000 BTC ($1.32 billion) reserve held in a distinct address "to handle severe security incidents". However, the current status of this balance remains unconfirmed. Furthermore, HTX and associated companies underwent multiple exploits during the previous year, resulting in losses worth millions of dollars.
Similarly, OKX, a cryptocurrency exchange, maintains a user protection "Risk Shield" scheme worth $700 million, although the composition of this sum – whether tokens, stablecoins, or fiat funds – remains ambiguous. Several exchanges, including Coinbase, limit their insurance offerings based on client location and the nature of their stored funds – fiat or crypto.
For a variety of considerations, such as cybersecurity threat apprehension or, in instances like the now-discontinued cryptocurrency exchange FTX, deceit, exchanges might opt not to disclose their holdings' on-chain addresses. In 2021, ex-FTX CTO Gary Wang confessed to relevant authorities that the exchange's claimed $100 million insurance fund was a fabrication, devoid of any FTX tokens (FTT). FTX's insurance pool aim was to prevent user losses in the event of dramatic, abrupt market swings, and its worth was frequently publicized on its online platforms and social media.
Moreover, on-chain addresses provide only a partial narrative and exclude details such as an exchange's off-chain responsibilities. In some regions, such as Hong Kong, regulations decree that cryptocurrency exchanges provide user insurance covering up to 50% of their fiat and crypto assets.
Published At
4/3/2024 9:32:18 PM
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