Binance Plunges $215 Million In BTC And BNB Into Emergency Fund
The world’s largest crypto exchange, Binance, has doubled up its emergency fund due to the extreme market volatility as the firm tries to navigate its current dispute over the potential takeover of FTX.
Binance Add Funds To Backup Reserve
In a recent Twitter post, CEO Changpeng Zhao (CZ) noted that the crypto giant has topped up its Secure Asset Funds for Users (SAFU) due to the recent market fluctuation and to ensure the fund once again reached $1 billion in crypto assets.
Furthermore, Binance recently transferred 194,500 BNB worth $62 million and 8,325 BTC worth $153 million into the emergency fund, as reported by The Block. This brings the total deposit to $215 million.
However, the Binance spokesperson did not specify the size of the deposit. Still, the Binance boss shows in his tweet that the fund’s BNB balance is currently above $700 million, while its BTC balance has reached $300 million.
Binance revealed that SAFU is an “emergency insurance fund” set up in 2018 to help provide stability to the exchange during a moment of price fluctuation. The exchange usually transfers a percentage of its trading fees to boost the fund’s balance.
As of the end of January 2022, the fund’s BNB, BUSD, and BTC are roughly $1 billion before the latest top-up.
Crypto Market Turbulence Affects Fund’s Size
The current price volatility in the broader crypto market, which has dramatically affected the price of Bitcoin and Ethereum, has shrunk the emergency fund’s size.
However, the decline is linked to the shocking news that made the rounds on Tuesday that Binance has agreed to acquire rival crypto exchange FTX. The new development comes after FTX halted withdrawals on its platform.
The collapse of the FTX enterprises has shaken the entire crypto industry due to the significance of the firm’s contribution to the digital asset ecosystem. FTX has always been a massive player in the industry, and as the fourth-largest crypto exchange, the firm has played a leading role in the call for legislation.
However, Bankman-Fried is still admired in the crypto space, and he may continue to be, but his company will cease to exist as it prepares to go under the management of Binance. On a broader scale, this would have long-term consequences and might serve as a precedent for others yet to occur.
What Happened to FTX?
The issue began last week after multiple news reports indicated that Alameda Research, one of the FTX CEO’s trading companies, holds many FTT tokens. The FTT tokens are the native coin of FTX.
As a result, and among other factors, the exchange halted the withdrawal of customers’ assets from its platform. The once-healthy financial status of FTX has shown another underlying trouble that forced Binance to move to forestall a looming liquidity crunch.
The move depicts a dramatic decline in the fortunes of Bankman-Fried as a billionaire. However, the prices of most crypto tokens are attempting to stabilize following the initial shock triggered by the Binance-FTX deal.
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