Binance launched the SAFU fund in 2018. SAFU stands for Security Asset Fund for Users. Security funds are one of the key factors to look out for when choosing a crypto exchange.
In 2018, Binance introduced the SAFU fund to secure the capital of users and protect them in case of hacks, bugs, or exploits. The fund grows larger each day, as Binance allocates 10% of all trading fees directly into the Security Asset Fund for Users. Not only does Binance have over $1 billion in its fund, but it also is the largest security fund in the whole cryptocurrency exchange space. No other trading platform has a security fund of this size.
Aside from just sending 10% of the trading fees to the SAFU fund, Binance is very transparent and releases the wallet addresses to the public. You can track the value of the SAFU fund with the wallet addresses below:
- Bitcoin: 1BAuq7Vho2CEkVkUxbfU26LhwQjbCmWQkD
- BNB and USDT (BEP20): 0x4B16c5dE96EB2117bBE5fd171E4d203624B014aa
- TUSD (ERC20): 0x4B16c5dE96EB2117bBE5fd171E4d203624B014aa
One thing to understand is that crypto exchanges are not functioning like banks. While banks must offer insurance of customer funds to a certain extent, crypto exchanges do not have to do that. Furthermore, history has proven that governments will always bail out banks.
The cryptocurrency industry is also a widely unregulated area. If an exchange goes bankrupt and registers for insolvency, the customers can be lucky to even receive a penny back. Also in cases of hacks, it is more likely that the exchange will go down rather than customers being paid out. That is also a reason to never store your long-term holdings on an exchange, but in a personal wallet instead. You should only keep on the exchange what you are actively trading with.
The Binance Security Asset Fund for Users will be used to compensate users in worst-case scenarios. Luckily, so far Binance did not have to make use of its fund and the customers’ funds remain safe.
Binance is considered to be one of the most secure crypto exchanges. So far, nobody has lost money on the exchanges due to hacks or other illegal activities. Furthermore, Binance provides additional features that play a key role in security.
At the end of 2022, Binance started providing full proof of reserves. That means that Binance keeps all customer funds in public wallets with a reserve ratio of 1:1, in most cases with even more than 100%. That means that your funds are actually held on the platform and not lent out to other entities. Providing proof of reserves became the industry standard after FTX went bankrupt because of mismanaging customers’ funds.
If you are actively on crypto Twitter and Youtube, you might know about the meme “Funds are safu”. In 2018, Binance experienced issues with its website and the service was down for some time. On Twitter, CZ claimed that the “Funds are safe.” After the website was back up and running, the funds were indeed safe. The Youtuber Bizonacci made a video about this day of CZ saying “Funds are safe”. Ever since the term “Funds are safu” has become a widespread meme in the crypto space. The video is just 3:13 minutes and is a part of crypto history that every trader should know about. You can watch the legendary video here: https://www.youtube.com/watch?v=dRYY9HjtZqs