Glossary
Insurance fund
A pool of assets an exchange sets aside to cover losses — either customer losses after a security incident, or liquidation shortfalls on derivatives, depending on the fund.
Two very different things share this name, and the difference matters to what it protects. The first is a user-protection fund: Binance's SAFU, Bitget's protection fund. These exist to make customers whole after a breach or a failure, and Binance drew on SAFU to cover the 2019 hot-wallet loss in full. The second is a derivatives insurance fund, which absorbs the shortfall when a liquidated position cannot be closed at a price that covers the loss. Bybit and OKX describe theirs in these terms. It protects the integrity of the futures market and the winning side of a trade, not your spot deposit.
Our safety-scores table quotes each exchange's own description of its fund so the reader can see which kind it is. Kraken, Coinbase, MEXC and KuCoin disclose no dedicated fund; Coinbase instead carries commercial crime insurance on hot-wallet balances, which is a third, narrower thing again.
Size and transparency vary. Some funds publish a live balance and wallet addresses; others give a figure once a year or never. A fund you cannot verify is a promise, and we score it as one.
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Frequently asked questions
Will the insurance fund reimburse me if the exchange is hacked?
Only if it is a user-protection fund, and only to the extent of its balance. A derivatives insurance fund does not cover spot deposits at all.
Is an exchange insurance fund like bank deposit insurance?
No. It is the exchange's own money, not a government scheme, and it carries no legal guarantee. No exchange on our list offers government-backed protection on crypto balances.
Related terms and pages
Related terms
- Liquidation
The forced closure of a leveraged position by the exchange when losses have consumed the margin backing it.
- Proof of reserves
A published cryptographic or audited demonstration that an exchange holds the assets its customers have deposited.
- Cold storage
Holding crypto in wallets whose private keys are never connected to the internet, so they cannot be reached by a remote attacker.
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