The Binance Secure Asset Fund for Users (SAFU) Insurance Fund faces criticism as on-chain data reveals 44% of it is backed by Binance native token BNB.
On-chain analyst Willy Woo revealed the initial $1 billion SAFU insurance fund comprises BNB tokens worth $367m (44%), BUSD tokens worth $300m (32%), and Bitcoin worth $270m (24%).
Binance’s Bitcoin address and BSC/BNB address confirm this, but the over-exposure to BNB tokens irks the community, as we recently witnessed the FTT token pulling FTX by its roots.
Willy Woo tweeted, “While I commend Binance for having such a fund, there’s no sense putting incidence-correlated BNB in there. How would we feel about FTX having an insurance fund filled with FTT?”
Also Read: Why is FTX’s FTT Token crashing down?
Together with the projected $800 million in Binance Custody, these funds still about match the $68 million in Binance’s proof of reserves as of today. However, any volatility, particularly in BNB, could result in a much lower valuation for SAFU.
While a part of the community still supports the BNB token exposure, with a CT user even tweeting, “binance’s money is readily available, not leveraged and sits on the chain for everyone to review. ftt is over leveraged with debts and fraud and there are no liquidity for its billions of fdv.”
Binance CEO responded to this tweet by saying Binance SAFU insurance fund is roughly split between BTC, BUSD, and BNB, and it’s just that BNB price rose faster than BTC since the last rebalance.
Amidst all this commotion, CZ announced Binance allocated another $1 billion to the industry recovery initiative (IRI) all in BUSD.
Also read: Binance CEO CZ Aims for $1B Fund for Distressed Digital Assets
Binance will commit $1 billion to investment opportunities, with the intention of increasing that sum to $2 billion in the near future if necessary.
With an initial combined commitment of roughly $50 million, Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group have already expressed interest in participating in the IRI.
Binance has already received around 150 applications from businesses looking for support under the IRI. Each IRI co-investor will have the chance to examine possible deals and choose whether they want to get involved on their own.
