With the ultimate goal of regaining investor confidence amid an extended bear market, crypto derivatives exchange Bitget launched a $200 million fund to protect users’ assets. Bitget joins the growing list of crypto companies, such as Binance, that have taken an investor-centric approach to gain investor confidence through protection funds.
The Bitget Protection Fund consists of 6,000 Bitcoin (BTC) and 80 million Tether (USDT), valued at $200 million at the time of writing. Given that the crypto winter is currently showing almost no signs of slowing down, Bitget pledged to safeguard the fund’s value for the next three years.
While Bitget chose to self-fund the entire protection fund without relying on a third-party insurance policy, Binance set up its user protection insurance fund, Secure Asset Fund for Users (SAFU), by allocating 10% of the trading fee. SAFU started in 2018 and reached a valuation of $1 billion in early 2022. Sharing details about the newly established fund, Gracy Chen, director of Bitget, added:
“The protection fund will help us address investor concerns and attract potential users. As we continue to weather the crypto winter, it is critical that our users can be confident that their funds are kept safe.”
Bitget’s reasoning behind using a combination of stablecoin and BTC in the protection fund is to counter massive unforeseen volatility in crypto markets. To further protect investors, Bitget implemented strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to prevent malicious parties from using its services.
Related: Voyager cannot guarantee that all customers will receive their crypto under the proposed recovery plan
Shortly after the bankruptcy filing, crypto lending firm Voyager Digital revealed that it may not be able to repay all of its customers under the proposed recovery plan.
We understand the importance of accessing the value in your account and we’ll work through this process as quickly as possible to do just that. Today’s post provides an update on customer cash and crypto, and next steps: https://t.co/yBlVB0qgVp (1/6)
— Traveler (@investvoyager) July 11, 2022
After court approval, Voyager’s proposed recovery plan will include paying back user funds worth approximately $1.3 billion in a combination of Voyager tokens, cryptocurrencies, “common stock in the newly reorganized company” and funds from any lawsuits with Three Arrows Capital (3AC).
“The plan is subject to change, negotiation with clients and ultimately a vote […] We created a restructuring plan that would preserve the client’s assets and provide the best opportunity to maximize value.” said the lender.