Topic: Binance announces crypto industry recovery fund/FTX question. (Read 79 times)

An interesting read about the insurance fund set up by Binance can be read here[1]. The blog is from Dr. Carol Alexander, a professor of Finance at Sussex whose focus has been, according to her bio[2], to "focus of my research is on the exciting new universe of crypto assets and their derivatives". According to her findings, it seems that, at the time, Binance Insurance Fund was composed by 3 funds - one for BTC/ETH, one for DASH/ZEC/ATOM/…, and one for XRP/EOS/LTC/LINK/ADA/….:

Insurance Fund	Value on 19 May (2021)	Value on 20 May (2021)
BTC/ETH:	291,853,183 USDT	288,718,799 USDT
DASH/ZEC/ATOM/…:	195,026,688 USDT	194,767,999 USDT
XRP/EOS/LTC/LINK/ADA/…:	145,825,533 USDT	145,763,166 USDT

From my readings it seems that the fund is mostly geared towards supporting the payment of positions that were autoliquidated, more than supporting users in case of a Binance failure (such as FTX one). I imagine than a brand new user entering the crypto world may feel "Protected" by this fund, but at the end of the day it's feasible impossible to assure all the clients of Binance that their funds are SAFU when their latest 24h trading volume was $10,676,940,548[3]

Additionally, at the time that she wrote the article (20th of August, 2021), she recalled the day (19th May) where she details how the liquidations took place and how the Binance Insurance Fund acted. In her follow up blog article[4], she states:

Regarding the mess that FTX got herself into, I don't think that there's any fund that will compensate their clients[5], unless they manage to get a hold of the available and "hacked" funds in order to compensate some clients at least:

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[1]https://www.coalexander.com/post/binance-s-insurance-fund
[2]https://www.coalexander.com/academic-bio
[3]https://www.coingecko.com/en/exchanges/binance
[4]https://www.coalexander.com/post/trading-operations-of-the-binance-insurance-fund
[5]https://cryptoslate.com/user-funds-deposited-into-ftx-cant-be-insured/

Ok, that is the truth. Insurance will come to play when there is an accidental lose, theft and hack in the case of online exchanges. But the case of FTX is a mismanagement problem which is not covered by the insurance premium law.
How will Binance be able to use the recovery fund to help others, is it a charity work or there are documents written and signed.

Well even FTX is hiding in the Bamahas. Binance in Cayman Island, that's not unusual anymore for companies who want to avoid US regulations the fact that there are no regulations yet. But he may get into deep with this crypto industry recovery fund. He doesn't need to do this and be lured to this FTX bait to get Binance Holdings ltd.

If the US government wants to regulate crypto, there is binance.US that is under thier jurisdiction.

Coinbase was way ahead, I received an email from them about the safety of the funds a week ago if I am not wrong but there is no SAFU like feature is available with them or any other exchange apart from Binance.

But as mentioned above its only come handy when the exchange got hacked not when they go bankrupt so its just to stop the panic among the users not really a solution if Binance has same situation as FTX.

Insurance is already not in play when the company got bankrupt which the current situation of FTX. Binance will only promise safety of funds through hack but all users fund will be loss in case the scenario happened to FTX will happened to Binance too. At some point, Binance might get into tight spot since they are avoiding regulators since the beginning.

CZ is damn genius on mind conditioning crypto people. He started this mess and now he is trying to show how string Binance is after burning there top competitor.

Did you ever heard of a ponzi scheme have any kind of insurance/backup?! Come on...
CZ is ahead already, he is boasting for years Binance's SAFU fund, which is, at least in theory, somewhere separate and meant as insurance/backup (at least in case of hack of the hot wallet).

But even such a fund like for the hot wallet insurance is, by far, insufficient when we discuss of all the money from the customers. That's why the new trend is the proof of funds.
And back to FTX. Lately it was said that they were holding exactly 0 bitcoins in their reserves. I will add ironically that probably half of that is meant as insurance.

I was sent this email by binance which is an indicated that they know that people are losing confidence in exchanges because of the drama they have been putting up recently. My main aim of raising this topic is not because of the Industry Recovery Fund project by CZ, my main emphases is the last sentence in the binance announcement, which indicated that binance has increase her insurance fund from $1 billion to something higher.

My Question:
Did FTX had this kind of insurance fund? If they had, people would not be crying around.
If they don't, it will be right to say CZ is ahead and master of the game.