Crypto derivatives exchange Bitget announced the creation of a $200 million fund to protect user funds with the ultimate goal of regaining investor trust in the midst of a protracted bear market. Bitget has joined the expanding group of cryptocurrency firms, like Binance, that have adopted a protection fund-focused strategy in an effort to win over investors' trust.
The Bitget Protection Fund is made up of 6,000 Bitcoin (BTC) and 80 million Tether (USDT), which are currently worth $200 million. Given that the current crypto winter shows absolutely no indications of abating, Bitget promised to maintain the fund's worth for the following three years.
In contrast to Bitget, which decided to self-finance the full protection fund rather than rely on a third-party insurance policy, Binance established its Secure Asset Fund for Users (SAFU) user protection insurance fund by dedicating 10% of the trading cost. By the beginning of 2022, SAFU, which began in 2018, had a $1 billion valuation. Sharing details about the newly founded fund, Gracy Chen, managing director of Bitget, added: “The protection fund will help us mitigate investors’ concerns and attract potential users. As we continue to endure the crypto winter, it is crucial that our users can rest assured that their funds are kept safe.”
The protection fund's use of both stablecoin and BTC is justified by Bitget's desire to combat the unpredictably high volatility of the crypto markets. Bitget put in place strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to prevent bad actors from using its services, further protecting investors.
Voyager Digital, a crypto loan company, disclosed shortly after declaring bankruptcy that the suggested recovery strategy might not be able to fully reimburse all of its consumers.
Voyager's suggested recovery plan calls for paying back customers' monies worth approximately $1.3 billion with court permission using a combination of Voyager tokens, cryptocurrencies, "common shares in the newly reformed corporation," and money from any proceedings with Three Arrows Capital (3AC).
“The plan is subject to change, negotiation with customers, and ultimately a vote […] We put together a restructuring plan that would preserve customer assets and provide the best opportunity to maximize value.” said the lending firm.