Willy Woo Raises Concerns On “BNB-Backed” Binance SAFU Fund
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Popular chain analyst Willy Woo expressed concern about Binance’s Secure Asset Fund for Users (SAFU). He believes it is not safe to invest “incidence correlated BNB” in the SAFU fund. Willy Woo compares it to the crypto exchange FTX, which has an insurance fund backed by FTT.
Is it safe to hold BNB in Binance SAFU Fund?
Willy Woo a Tweet On November 25, shared that Binance’s Secure Asset Fund for Users (SAFU) now consists of $367 million worth of BNB, which is 44% of the fund. It also has $300 million worth of Binance’s dollar-pegged stablecoin BUSD and just $270 million worth of Bitcoin. It has fallen well below $1 billion amid price volatility.
Willy Woo believes that the SAFU insurance fund, with 44% of its assets backed by BNB, is not safe. He compares it to FTT, the original token of the FTX crypto exchange, which collapsed massively in the midst of the FTX crisis. It would be like FTX having an insurance fund backed mainly by FTT tokens.
“While I commend Binance for such a fund, it makes no sense to invest incidence correlated BNB in it. How would we feel if FTX had an insurance fund full of FTT?
On November 9, crypto exchange Binance topped the emergency insurance fund with $700 million worth of BNB and BUSD tokens and $300 million worth of Bitcoin. However, Willy Woo pointed out that the fund is now down to $837 million amid market volatility. He also shared the Bitcoin and BSC addresses to verify the SAFU verification certificate. The exchange is planning to implement a Merkle tree-based reserve certificate system that will secure the reserves of its overall exchange.
The $837 in assets still equates to approximately $68 million in Binance’s Certificate of Deposit and nearly $800 million in Binance Custody. Willy Woo argues that the SAFU fund can strike in tough market conditions, as seen historically. The performance of BNB is directly related to the stability and success of Binance. Thus, it is about taking BNB into the emergency fund.
“BSC is controlled by 21 validators who select 11 BNB chain validators daily. There is circumstantial evidence that 11 beacon chain validators are centered around Binance. In the Binance event, BNB’s BSC valuation component would likely be sold off as well.”
BNB price stops
BNB is trading at $296, down almost 1% in the last 24 hours. The BNB token has failed to hold above $300 despite Binance’s strong performance and continued expansion.
Although the BNB token saw a nearly 9% weekly gain after Binance CEO “CZ” announced an industry stimulus fund, the price is not moving against the market.
Also Read: Binance $1 Billion Industry Recovery Initiative
The presented content may contain the author’s personal opinion and is subject to the market situation. Do market research before investing in cryptocurrencies. Neither the author nor the publication is responsible for your personal financial loss.