What exactly is Binance SAFU – A simple guide for beginners
The SAFU
fund is an emergency insurance kitty that was set up by Binance, which is the
largest cryptocurrency exchange globally in terms of trading volume. This fund
has been created to ensure that customers do not lose their money even in the
most extreme circumstances, like when there is a breach in security, hacking or
failure of systems.
Binance SAFU
came into existence in July 2018 following some early security mishaps
experienced by exchanges in the emerging crypto industry. Instead of being
reactive, Binance took a step further to enhance trust as well as ensure there
is long-term stability by introducing a safety net.
How Does
Binance SAFU Work
A part of
the trading fees charged by Binance goes directly into the SAFU fund. These
funds are kept separate from those in Binance’s main accounts and are therefore
not used for its day-to-day running expenses. The aim is to have SAFU always
ready so that it can be used to compensate users if the need arises.
In case of a
significant security breach leading to loss of customer funds, Binance may
access the SAFU to offset such losses without touching on client balances.
Through this arrangement, it is guaranteed that users will not lose out even
during the most unfortunate events.
With time,
Binance has assured that it keeps highly liquid assets as part of the SAFU holdings to ensure quick intervention whenever necessary.
Why Crypto
Users Need To Be Concerned About SAFU
SAFU allays
one of the greatest concerns for users, which is losing their money through no
fault of their own while engaged in crypto trade, which is very risky, particularly when done through centralized exchanges.
Although it
does not get rid of every risk, SAFU offers an added layer of financial
security and assurance, particularly among newbies joining the crypto space.
Many traders feel safe using Binance because they have SAFU, unlike other
platforms that are smaller and not very transparent.
There have
been instances where Binance utilized SAFU to fully reimburse customers
following security breaches hence reinforcing its trustworthiness.
Is Binance
SAFU Similar to Insurance
No, it
isn’t. SAFU differs from conventional third-party underwritten insurance
policies. It is a self-financed protective tool managed internally by Binance
for flexibility and speed in responding to incidents without waiting for
insurance claims processing.
Nonetheless,
being self-managed means that SAFU coverage is subject to Binance’s policies
and discretion rather than any legal insurance agreement.
What Is Not
Included In SAFU Coverage
SAFU does
not guard against errors committed by users, such as sending money to an invalid
address, falling prey to phishing frauds or misplacing confidential keys.
Specifically, it is meant for failures at the platform level and not mistakes
made by individual users themselves.
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