Binance Converts $1B Safu Fund To Bitcoin Following Criticism — Is A Rally Coming?

What Happened

Binance announced it will convert its $1 billion SAFU fund from stablecoins to Bitcoin reserves within 30 days, responding to mounting community criticism that intensified after prominent Wall Street investor Cathie Wood publicly attributed recent market weakness to a Binance-related deleveraging event.

ARK Invest founder Cathie Wood appeared on Fox Business on January 26, explaining Bitcoin’s recent weakness by stating that “on October 10 last year, Binance experienced a software glitch that triggered massive automatic deleveraging, forcing liquidations totaling approximately $28 billion.“

Binance detailed its 2025 achievements in its open letter accompanying the SAFU announcement, noting it recovered $48 million in misdeposited assets across 38,648 cases, prevented $6.69 billion in potential scam losses by assisting 5.4 million users, and collaborated with global law enforcement to combat illegal activities involving $131 million.

Market Context

The exchange pledged to maintain the fund’s value at $1 billion through regular rebalancing, replenishing it with additional Bitcoin if price fluctuations push the fund below $800 million.

While Binance has faced criticism since its inception, the current backlash escalated dramatically after Wood’s television appearance and has expanded to encompass concerns about token listing quality, market structure, and platform transparency.

The October 10 event saw approximately $19 billion in forced liquidations across crypto markets, though analysts later clarified actual trader losses represented just 5% to 15% of that headline figure, translating to between $950 million and $2.85 billion in real losses according to Kaia DLT Foundation chairman Sam Seo.

Binance provided $283 million in compensation to affected users, maintaining that its systems functioned as intended during what it described as extreme market conditions.

Community frustration centers partly on this compensation, which represents roughly 1% of total liquidations, with questions persisting about system vulnerabilities and market maker activity.

Technical failures during extreme volatility prevented users from managing orders, while system overloads, pricing display errors, and asset depegging contributed to the chaos.

Founder Changpeng Zhao addressed what he termed “twisted FUD” around recent market commentary, emphasizing that “Binance only converts a portion of their revenue to pay for expense. They are a large net hoarder.“

Why It Matters

The deletion appeared to signal internal recognition that the remark had opened floodgates to accumulated frustrations dating back three months.

User-generated statistical analyses suggest that 9 out of 10 Alpha tokens fail to maintain value, leading some to question whether listings provide unfair advantages to insiders while retail buyers absorb losses.

Details

The move comes as Binance faces its most significant reputational challenge since the October 10 crash, with critics across English and Chinese-speaking communities demanding that the exchange use profits to build Bitcoin reserves and support the broader industry.

Cathie Wood’s Remarks Ignite Pent-Up Community Anger

The comment from one of Wall Street’s most prominent Bitcoin advocates resonated across crypto communities, particularly as ARK had purchased over $20 million in Coinbase stock that same week.

Binance co-founder He Yi quickly responded with a post noting, “Cathie Wood isn’t a Binance user. We don’t serve U.S. Individuals or U.S. entities. No offense,” but deleted the message shortly after.

Wood’s comment tapped into anger that had been building since October, when Binance’s limited public explanations about the crash left many users dissatisfied.

According to BlockFlow analysis, the criticism now ranges from operational concerns to serious accusations about platform management, with some voices comparing the situation to previous exchange failures.

Even competitors joined the criticism, with OKX founder Star Xu posting on January 28 that “the incident caused real and lasting damage to the industry,” though he avoided naming Binance directly.

Criticism Concentrates on October Crash and Token Listings

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.

Exchange Commits Bitcoin Reserves Amid Institutional Optimism

The exchange maintained proof-of-reserves covering approximately $162.8 billion across 45 crypto assets while listing projects across 21 public blockchains.

He noted the exchange operates under global regulatory oversight that can review every trade on every account.