SAFU

SAFU, short for Secure Asset Fund for Users, is a reserve established by the cryptocurrency exchange Binance in 2018 to protect user funds in extreme events such as security breaches. The fund is funded through a portion of trading and other fees and is intended to be held separately from user deposits and company assets. Its purpose is to provide an emergency backstop to cover losses that occur due to security incidents, preserving confidence among users and the broader market.

History and purpose: Binance announced SAFU in 2018 with the goal of creating a reserve large enough to cover user losses in a worst-case scenario. The fund gained particular attention after a security breach in May 2019, when hackers stole a substantial amount of assets, including about 7,000 BTC and other cryptocurrencies. Binance stated that SAFU would cover the losses suffered by affected users. The exact size and composition of SAFU are not fully disclosed, and the fund’s holdings are kept separate from user deposits.

Operation and funding: Access to SAFU requires Binance’s approval, and funds are intended to be used to compensate user losses arising from security incidents. The reserve is claimed to be separate from customer funds and is not insured by a third party. The ongoing funding of SAFU comes from a portion of Binance’s trading and related fee revenue, rather than from user balances.

Governance and transparency: Binance controls SAFU and does not publish detailed public accounting of its holdings, which has drawn criticism and calls for greater transparency or independent audits. Proponents view SAFU as a prudent risk management tool for a centralized exchange; critics point to the lack of external oversight.

Impact: SAFU represents a notable example of an emergency backstop in the crypto exchange sector and has influenced discussions about reserve funds on other platforms.