Leading crypto exchange, Binance plans to launch an “industry recovery fund” to help projects struggling due to recent liquidity crunches from the FTX saga. Binance CEO Changpeng Zhao (CZ) made this disclosure in a Monday tweet confirming a bailout fund for “strong projects” in a liquidity crisis.
CZ added that further details would be disclosed in the future and beckoned projects that fall into the category to reach out to Binance Labs.
When quizzed on whether FTX would have qualified for such a bailout, the Binance CEO responded, “Liars or fraud never qualify as strong projects. This is for other projects in the ecosystem.” Recall that Binance had pulled out of a deal to acquire FTX after it became clear that the latter had fallen into a deep crisis.
The recent FTX washout has had a significant impact on the crypto space. The company’s FTT token had lost about $2 billion in value, while more than $150 billion (approximately 15%) has already been wiped from the crypto market cap.
Global financial regulators are now also keeping a closer eye on the industry at a time when regulations are understandably stricter. The saga is also expected to lower the global adoption of cryptocurrency amid growing fears and market uncertainty.
Binance Moves to Reduce “Cascading” Market Decline
The proposed Binance recovery fund is intended to be a cushion for strong projects adversely affected by the impact of the recent FTX saga. The funding would generally help reduce further “cascading negative effects” facing the industry, CZ noted.
Since the FTX collapse, several companies that form part of Sam Bankman-Fried’s empire have faced financial liquidity issues. Prime among those companies include cryptocurrency lenders like Voyager and BlockFi, which FTX had falsely bailed out.
Meanwhile, Binance also beckoned on other exchanges “with cash” and intends to co-invest to come together and aid the recovery efforts. The Binance CEO sought to assure investors that “crypto is not going away” and called for rebuilding the ecosystem.
