Popular on-chain analyst Willy Woo has warned of a fund from the largest Bitcoin and altcoin exchange Binance. He expressed concern about Binance’s Secure Asset Fund for Users (SAFU). He believes it is not safe to put exchange-related BNB in the SAFU fund. Willy Woo compares such a situation to FTX having an insurance fund backed by FTT. Here are the details…
Bitcoin analyst Woo voices doubts about Binance’s fund
Willy Woo tweeted on November 25. He stated that Binance has $367 million in BNB in its SAFU fund. He pointed out that this constitutes 44 percent of the fund. He also pointed out that the value of Binance USD (BUSD) in the fund is $300 million. He stated that Bitcoin is only worth $270 million. As we’ve reported on cryptokoin.com, BUSD is Binance’s 1:1 stablecoin pegged to the US dollar. The stablecoin issuance is provided by Paxos.
Willy Woo believes that the SAFU insurance fund, 44 percent of whose reserves are backed by BNB, is not safe. He compares this to FTT, which dropped drastically during the FTX crisis. As it is known, FTT is the native token of the FTX exchange. According to Woo, the asset allocation in Binance’s SAFU fund is the same account as FTX has an insurance fund that is mostly backed by FTT tokens. Woo uses the following expressions:
While I appreciate Binance for having such a fund, there is no point in putting the BNB associated with the event there. What would we think of FTX having an insurance fund full of FTT?
The Binance $1b SAFU insurance fund today:
BNB: $367m (44%)
BUSD: $300m (32%)
BTC: $270m (24%)While I commend Binance for having such a fund, there's no sense putting incidence-correlated BNB in there.
How would we feel about FTX having an insurance fund filled with FTT?
— Willy Woo (@woonomic) November 24, 2022
Fund fell from $1 billion to $837 million
Crypto exchange Binance topped its emergency insurance fund with $700 million worth of BNB, BUSD and $300 million worth of Bitcoin on November 9. However, Willy Woo noted that the fund has now dropped to $837 million due to market fluctuations. Binance also shared Bitcoin and BSC addresses to verify SAFU proof of reserve. The exchange plans to implement a Merkle Tree-based proof-of-reserve system that verifies total exchange holdings.
The $837 fund is roughly the same as the $68 million in Binance’s proof of reserve and the nearly $800 million in Binance Custody. Willy Woo claims that the SAFU fund can take a hit in tough market conditions, as historically seen. The performance of BNB is directly related to the stability and success of Binance. Therefore, he argues that having BNB in the emergency fund is problematic. Woo used the following statements:
BSC is managed by 21 validators selected daily by 11 validators on the BNB chain. There is circumstantial evidence that the 11 beacon chain validators are based on Binance. In a Binance crisis, BNB’s BSC valuation component is also likely to be sold.
Woo has come up with correct predictions before
Willy Woo predicted that in May 2019, when Bitcoin was trading at $7,500, the price would drop to $5,500 in the third or fourth quarter. After predicting that $ 3,000 will be seen in Bitcoin, Woo also knew this. In addition, the analyst came to the fore with the NVT method he developed himself. The analyst correctly predicted the decline of Bitcoin to $ 9,000 at the end of August 3 years ago.
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