Bitget, a popular cryptocurrency platform, announced on Tuesday that it had increased the amount of the current Protection Fund to $300 million. After the FTX collapse, the crypto exchange wants to reassure investors and build better protection tools.
The Protection Fund was first introduced in July 2022 with a fund worth $200 million (6000 BTC and 80 million USDT). It is self-funded to better safeguard clients’ assets and efficiently cover users' wealth. An additional $100 million will come from investments in highly liquid cryptocurrencies, like BTC, USDT and USDC.
The exchange has pledged to protect the value of the fund for the next three years without withdrawals. If the value begins to decline, e.g., in the event of excessive bitcoin decline, the platform intends to invest additional funds. As a result, the value of the Protection Fund is expected to remain at $300 million at all times.
All information about the fund and its wallet is transparent and can be found on a dedicated page.
"Expansion for Bitget Protection Fund is another move by Bitget to help enhance trust and confidence in the crypto space as a whole. Working as an emergency reserve and with additional capital, the fund would be able to offer top-notch safety and protection for users, especially in extreme and unpredictable situations in the crypto space. We believe that risk management policies such as protection funds would become the norm for prominent and reliable exchanges," Gracy Chen, the Managing Director of Bitget, said.
After FTX Collapse, Crypto Exchanges Implement Proof-of-Reserves
According to the press release, Bitget announced two additional initiatives to safeguard its customers better. In a move to support FTX traders, the crypto exchange has started a 5 million USD Builders' Fund. Bitget is also working on its own Merkle Tree Proof-of-Reserves and plans to release it within 30 days.
Merkle Trees allow users to efficiently and transparently certify individual transactions. In the wake of the FTX collapse, cryptocurrency exchanges began offering such a solution and pledging to Proof-of-Reserves to reassure users and rebuild their trust.
A Proof-of-Reserve (PoR) is an audit of a cryptocurrency exchange's finances conducted by an independent entity to confirm that the platform is holding funds on behalf of its customers.
Many large exchanges have decided to implement PoR after the recent market turmoil, e.g., Binance, Crypto.com and Kraken.
