Binance Uses Half of SAFU Fund to Cover $6.3 Billion Hack Losses, Replenishment Timeline Unclear

Binance has used about half of its user protection fund to cover losses from a major hack.

CoinDesk reported on Nov. 3 that about 7,500 Bitcoin remained in the official Bitcoin wallet for Binance’s Secure Asset Fund for Users, or SAFU, as of that day. The balance fell sharply after four transactions on Oct. 31.

Binance accumulated a total of 15,000 Bitcoin when it converted the roughly $1 billion SAFU fund from stablecoins into Bitcoin in February. The current balance is about half that amount. At a Bitcoin price of $77,000, it is worth about $580 million.

SAFU is an emergency reserve set aside to compensate users when unexpected incidents such as hacks damage customer assets. Binance has said it operates the fund under a policy of restoring it to about $1 billion if its value falls below $800 million because of swings in Bitcoin’s price.

That rule, however, applies to declines in asset value caused by a drop in Bitcoin prices. Binance has not specified a replenishment standard for cases where the fund is used for actual compensation.

Binance said on Oct. 31 it would deploy part of the SAFU fund to cover hack-related losses of about $6.3 billion. The company also said it would use corporate assets and its futures insurance fund to make up the losses, and pledged to restore SAFU to about $1 billion.

The company has yet to disclose a timetable for replenishing the fund. Binance also has not said how much it actually used from the futures insurance fund.