If you buy and sell cryptocurrency in the top crypto exchanges, you feel that it's safe and secure. After FTX collapse, people see how safe and secure a centralized crypto exchange is. No doubt FTX was very popular and it was the top 2nd crypto exchange. What do you think about the top crypto exchange Binance?
Binance has SAFU funds, so customers may feel safe with their crypto over there. How safe is Binance SAFU anyway? According to on-chain analyst Willy Woo, most crypto in the Binance SAFU insurance fund is BNB. It is almost 44% of the total holdings. SAFU holds 32% BUSD stablecoins and 24% BTC.
SAFU was formed in 2018 to protect customers' crypto in case anything happens, customers can get their crypto. Having fund for customers' protection is a definitely good thing. It will increase confidence. People may feel comfortable using crypto exchanges.
Founder of Terra LUNA Do Kwon bought BTC that was supported to act as a protection to peg UST. There was a talk back then about LUNA and UST, and LUNA was one of the top 10 cryptos. But when it started collapsing, nothing worked to prevent its falls. A lot of people lost their money in LUNA and UST.
Alameda Research's balance sheet was leaked and they held a large portion of FTT tokens as assets in their balance sheet. FTT was created by FTX. Crypto exchange FTX and Alameda Research are owned by the same person Sam Bankman-Fried or SBF. People realized how risky it was and they rushed to withdraw crypto from FTX.
FTT token price crashed and nothing stops FTX and Alameda Research from the terrible collapse. Now if you think about Binance SAFU, how safe do you feel about the Binance fund that is supposed to protect customers' crypto? BNB is like FTT created by Binance although there is BNB Smart Chain and BUSD is associated with Binance as well.
In case things move in another direction, BNB as well as BUSD will be affected more. Many people use BNB Smart Chain, but it is clear how centralized BSC is. They have the power to shut it down quickly and it happened when there was a hacking incident.
What decentralized exchange can offer, you will not get that from any centralized crypto exchange. We will see more innovation and development in DeFi. DeFi is not hype, it is going to be a big thing in crypto.
So what do you think about Binance SAFU? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.
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I think the SAFU fund is a good idea to support the rest of the crypto space. At this point, crypto is still a small part of the entire population but I just don't know how safe Binance is. After all, it's just a report saying they have the funds available without verification.
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And we also don't know about Binance's liabilities. You cannot get a complete picture only by looking at the assets.
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