Binance forming industry recovery fund to help projects in liquidity crisis: CEO

Market


World’s largest cryptocurrency exchange Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis, said its chief executive Changpeng Zhao, commonly known as ‘CZ’ in a tweet on Monday, to reduce further the cascading negative effects of FTX.

Sam Bankman-Fried’s FTX filed for bankruptcy on Friday after a week of seeing customers pull assets and Binance abandoned a rescue offer. Bankman-Fried and his company are under investigation by the Department of Justice and the Securities and Exchange Commission. The investigations likely center on the possibility that the firm may have used customers’ deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research, a violation of US securities law.

“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify,” he tweeted.

Zhao also said that other industry players with cash who want to co-invest are welcome to support with the project. “Crypto is not going away. We are still here. Let’s rebuild,” he added.

Separately in a gathering of G20 leaders at the summit in Bali, Zhao called for new but stable and clear regulations for the industry, in light of recent developments and participants cutting corners.

“We’re in a new industry, we’ve seen in the past week, things go crazy in the industry.. We do need some regulations, we do need to do this properly, we do need to do this in a stable way,” he said.

FTX’s bankruptcy marked a stunning reversal for Bankman-Fried. The 30-year-old had set up FTX in 2019 and led it to become one of the largest crypto exchanges, accumulating a personal fortune estimated at nearly $17 billion. FTX was valued in January at $32 billion, with investors including SoftBank and BlackRock.

Meanwhile, the fallout from the collapse of crypto exchange FTX kept bitcoin and other cryptocurrencies under pressure on Monday. The crypto market has lost about $200 billion in value in the past week itself.

(With inputs from agencies)

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