Binance to start Recovery Fund for crypto projects in crisis

Tomiwo Ojo

Binance CEO Changpeng “CZ” Zhao has disclosed that his exchange is setting up an industry recovery fund to help rebuild the industry.

CZ said that more details would be announced in the coming days. He further urged that other industry players interested in co-investing were also welcome.

“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.”

The crypto industry witnessed the collapse of the FTX empire last week. FTX was the second largest cryptocurrency exchange by trading volume at the time.

Read also: FTX officially files for bankruptcy as CEO resigns

When FTX was launched in 2019, Binance invested in the centralised exchange because CZ foresaw its huge potential. The Sam Bankman-Fried (SBF) founded exchange grew rapidly, dominating the United States market.

Several events, including several controversial decisions and social media spats, contributed to a tumble of several tokens and the exchange’s downfall. Binance announced that it was willing to acquire FTX to help the latter exchange.

After announcing its decision to acquire the embattled rival crypto exchange earlier, Binance disclosed that it would walk away from the deal after going through FTX’s financials and structure during the due diligence process.

Via its official Twitter handle, the exchange claimed that regulatory pressure and other factors impacted its decision. It claimed that the company reviewed FTX’s books and decided to leave their non-binding agreement. The exchange said:

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of”

Read Also: Crypto market in turmoil as Binance back out from FTX deal

Binance, the biggest crypto exchange by trading volume, explained that it was willing to support the embattled exchange by providing its customers with liquidity; however, issues were “beyond our control or ability to help.”

The firm also said, “Every time a major player in an industry fails, retail consumers will suffer,” while adding that the ecosystem will eventually become more resilient with the weeding out of bad players.

Binance, CEO, Chinpeng Zao
Binance, CEO, Chinpeng Zao

FTT, the exchange’s native token, plummeted from a high of $25 to a low of $1.29. FTX filed for bankruptcy, and its CEO Sam Bankman Fried stepped down.

Read also: Binance to acquire FTX amid current public feud 

After the downturn caused by the FTX meltdown, the cryptocurrency market is uncertain. Given this, the industry faces a tough time with potentially increased legal troubles and regulatory scrutiny across jurisdictions.

Crypto enthusiasts have since warned that several other exchanges would suffer similar fates over the coming weeks as the liquidity crises would continue. However, CZ seeks to bring a positive notion into the industry during this time.

Binance continues to show commitment to the crypto community

Binance, the largest cryptocurrency exchange in the world, has shown commitment to ensuring that the crypto community gets as mus support as possible. It’s latest decision to provide a recovery fund for crypto projects in distress is another step in this direction

In October, Binance Pool started a $500 million lending project for private and public miners. The miners will need to pledge security in the form of physical or digital assets for the loan, which will have a duration of 18-24 months.

Tron founder Justin Sun said that Tron, Huobi Global, and Poloniex would support Binance in its initiative.

The BNB Token is up 3% on the news. Bitcoin and Ether also both gained 4% after the announcement was made.

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