Binance Emergency Fund Dwindles after SEC Lawsuit
Binance, the world’s largest cryptocurrency exchange, established an emergency fund in 2018 to reassure consumers that their digital assets were secure. Now that federal officials have focused on Binance, the value of its rainy day reserve has dropped by 11%.
According to blockchain addresses that Binance claims own the assets, the fund was worth at roughly $950 million at the start of the month. Binance’s market capitalization fell to $840 million after the Securities and Exchange Commission sued it last week.
The safe asset fund for users, or SAFU for short, is intended to reimburse damages caused by hacking or other vulnerabilities of Binance’s infrastructure. Binance creator Changpeng Zhao has also highlighted it in times of stress to provide consolation to users, such as when rival FTX crashed. It holds bitcoin, dollar-pegged cryptocurrencies, and BNB, a token launched by Binance.
That token, BNB, is extremely important in SAFU, accounting for about half of the dollar value.
BNB has dropped more than 20% since the SEC filed alleging that Binance’s offshore subsidiary operated an illegal trading platform in the United States and misappropriated consumer funds. The Justice Department is still looking into the trade on a criminal level.
(With inputs from Shikha Singh)
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