Binance launches fund to cover margin obligations of insolvent traders
The Binance cryptocurrency exchange this Monday announced the launch of the “official margin risk fund”.
Assets collected in the fund will be used to cover the remaining debt obligations in case of insolvency of the liquidated trader in margin trading.
“Currently, 15% of all interest charges on margin lending will be transferred to the fund,” the exchange writes.
It does not provide any other information, including the methodology for ensuring the transparency of the new instrument.
A similar insurance fund is, for example, at the BitMEX exchange. As of April 26, its size exceeded 35,500 BTC ($ 275 million).
Binance, for its part, supports another fund - the User Asset Security Fund (SAFU). It was launched on July 14, 2018, and is described by the company as an “emergency insurance fund”. It transfers 10% of commissions collected by the exchange, which are stored in a separate cold wallet. The fund's assets were used to cover losses after the theft of 7,000 BTC from the exchange in May 2019.
The Binance cryptocurrency exchange this Monday announced the launch of the “official margin risk fund”.
Assets collected in the fund will be used to cover the remaining debt obligations in case of insolvency of the liquidated trader in margin trading.
“Currently, 15% of all interest charges on margin lending will be transferred to the fund,” the exchange writes.
It does not provide any other information, including the methodology for ensuring the transparency of the new instrument.
A similar insurance fund is, for example, at the BitMEX exchange. As of April 26, its size exceeded 35,500 BTC ($ 275 million).
Binance, for its part, supports another fund - the User Asset Security Fund (SAFU). It was launched on July 14, 2018, and is described by the company as an “emergency insurance fund”. It transfers 10% of commissions collected by the exchange, which are stored in a separate cold wallet. The fund's assets were used to cover losses after the theft of 7,000 BTC from the exchange in May 2019.