Binance announced Friday it will convert its $1 billion emergency protection fund from stablecoins to Bitcoin (BTC) over 30 days.
The move follows three months of escalating criticism over the exchange's role in October's $19 billion liquidation event.
The conversion addresses community pressure that intensified after ARK Invest CEO Cathie Wood linked Bitcoin's recent weakness to a Binance software glitch during the October 10, 2025 crash.
Binance will replenish the Secure Asset Fund for Users if Bitcoin's price causes its value to drop below $800 million.
Founder Changpeng Zhao dismissed what he termed "twisted FUD" in a Thursday post on X, noting Binance operates under global regulatory oversight that can review every trade. The timing reflects growing tensions between the world's largest cryptocurrency exchange and critics questioning its market structure and token listing practices.
What Happened
Binance committed to complete the SAFU fund conversion by February 28, 2026, with regular rebalancing based on market value monitoring. The exchange described Bitcoin as "the foundational asset of this ecosystem and the premier long-term store of value."
The fund traditionally contained stablecoins to reduce volatility and ensure predictable coverage for security incidents. Binance previously converted the entire fund to USDC in April 2024, replacing its Bitcoin, BNB, and other holdings.
Friday's reversal attempts to address community demands that the exchange build Bitcoin reserves using profits rather than maintaining dollar-pegged stablecoins. Zhao stated Binance converts only a portion of revenue for expenses and operates as "a large net hoarder."
The exchange detailed 2025 achievements including recovering $48 million in misdeposited assets across 38,648 cases and preventing $6.69 billion in potential scam losses. Binance maintained proof-of-reserves covering approximately $162.8 billion across 45 crypto assets.
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Why It Matters
The October 10, 2025 crash triggered approximately $19 billion in forced liquidations within hours after President Trump threatened 100% tariffs on Chinese imports. Bitcoin fell 14% from $122,000 to $105,000 while some altcoins briefly traded near zero amid liquidity collapses.
Wood's January 26 Fox Business appearance attributed Bitcoin's weakness to automatic deleveraging on Binance that wiped out approximately $28 billion. Her comment resonated across crypto communities particularly as ARK had purchased over $20 million in Coinbase stock that week.
Binance co-founder He Yi quickly responded noting Wood wasn't a Binance user and the exchange doesn't serve U.S. individuals, but deleted the post shortly after. The deletion appeared to signal internal recognition that the remark had opened accumulated frustrations dating back three months.
OKX founder Star Xu posted January 28 that "the incident caused real and lasting damage to the industry," though he avoided naming Binance directly. The criticism now ranges from operational concerns to serious accusations about platform management.
Technical failures during extreme volatility prevented users from managing orders while system overloads, pricing display errors, and asset depegging contributed to chaos. Ethena's USDe stablecoin briefly traded at $0.65 on Binance despite holding $1 elsewhere, triggering cascading collateral liquidations.
Binance provided $283 million in initial compensation to affected users, later adding $300 million through its "Together Initiative" and $100 million in low-interest loans to institutions. Community frustration centers partly on compensation representing roughly 1% of total liquidations.
Separate controversies surround Binance Alpha, the exchange's early-stage token platform, where critics claim most listed projects follow patterns of sharp initial gains followed by steep declines. User-generated analyses suggest 9 of 10 Alpha tokens fail to maintain value.
Despite platform-specific controversies, institutional sentiment remains constructive. A recent Coinbase Institutional and Glassnode survey found 70% of institutions view Bitcoin as undervalued despite its drop from above $125,000 to around $90,000.
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