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25 May, 2024

Secure Asset Fund for Users (SAFU)

[ Sek-ur as-et fuhnd for ju-zers ]

SAFU is an emergency fund created by Binance to insure for potential exchange losses, later turned into a term for “assets are safe”.

Sam Farao
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Sam Farao
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Sam is our pioneering figure in affiliate marketing and the blockchain space (prior to co-founding Coinweb.com). His ventures, including Netpixel Media and Captana, have set new benchmarks in the affiliate marketing industry, leading to a notable acquisition by Speqta AB for 31.5 million Norwegian kroner ($3.8 million USD). Farao's foray into blockchain technology is marked...
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Michael, co-founder, and CEO of Global Digital Assets (GDA) Group, is a distinguished figure in the blockchain and Metaverse industries, with a focus on capital markets. As the former Managing Director of the XDB Foundation and CEO of MLG Blockchain, he has been involved in over $25 billion of digital asset financings. A pioneer in...

The SAFU crypto fund acts as free insurance for crypto exchange users in case of emergency. It stands for Secure Asset Fund for Users, and it was created by the founder of Binance (Changpeng Zhao) in 2018.

Even though it’s also used as a slang term for “safe,” this is the only well-known exchange to have such a program.

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The current Binance SAFU wallet holds around $1B of various assets in this address: 0x4B16c5dE96EB2117bBE5fd171E4d203624B014aa

What Is SAFU Crypto?

“An emergency user protection reserve which offers protection to Binance users in the event of a security breach.”

Changpeng Zhao, Binance Founder

The SAFU crypto fund includes various cryptocurrencies stored in separate cold wallets (offline). The best-known one is the Binance SAFU, which holds a fixed emergency amount in Bitcoin, BnB Coin, and stablecoins. 

Binance SAFU Allocation
Binance SAFU Allocation | Source: Techopedia.com

Binance committed 10% of the exchange trading fees to fund the SAFU wallets for up to ~$1B. The company occasionally increases this limit under difficult market conditions. However, the real goal isn’t to cover all losses but to secure the exchange in a way that never needs SAFU to be used.

Still, the 2018 crypto market was a lot smaller than today, and the SAFU amount hasn’t increased proportionally with the exchange’s user growth.

What Is The Origin of SAFU Crypto Fund?

In 2018, Binance underwent an unscheduled maintenance day followed by a brief update from the founder:

This became the default response to similar future events. A creator called Bizonacci turned this into a viral meme video (“Funds Are Safu”) that later led to the idea of the acronym. Since then, CZ continued posting with this new line instead.

In the last major Binance incident (2019), the SAFU was supposedly used for the first time, although none of the known wallets showed any new transactions.

Conclusion

With far over $10B of volume and $100B in assets, clearly SAFU isn’t enough to cover for potential losses from Binance.

Although it can cover minor incidents, the real SAFU meaning seems to be about maintaining public trust and perceived safety. It’s also worth noting that the Binance Terms of Service don’t indicate any legal obligation to compensate for losses with this free form of insurance.

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Sam Farao
Written by

Sam is our pioneering figure in affiliate marketing and the blockchain space (prior to co-founding Coinweb.com). His ventures, including Netpixel Media and Captana, have set new benchmarks in the affiliate marketing industry, leading to a notable acquisition by Speqta AB for 31.5 million Norwegian kroner ($3.8 million USD).

Farao’s foray into blockchain technology is marked by the Lightbulb Man project, a blockchain-based art collection featuring NFTs, which sold out in one day! This highlights his role in merging the worlds of art and digital technology.

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