Binance Creates $1 Billion Crypto Industry Fund After FTX Crash

Binance Creates $1 Billion Crypto Industry Fund After FTX Crash

Binance co-founder and CEO Changpeng Zhao has given several interviews where he discusses the outlook for the cryptocurrency after a couple of turbulent weeks in the market.

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Cryptocurrency exchange Binance on Thursday announced new details about its industry recovery fund, which aims to support players struggling in the wake of the disastrous FTX bankruptcy.

In a blog post, Binance said it will allocate an initial commitment of $1 billion to a recovery fund. The company added that this amount could be increased to $2 billion at some point in the future “if the need arises.”

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He also received $50 million in commitments from crypto investment companies including Jump Crypto, Polygon Ventures and Animoca Brands.

Binance CEO Changpeng Zhao shared the public wallet address, showing his initial commitment, and said, “We are doing it transparently.” Public blockchain data reviewed by CNBC showed a balance of around $1 billion in Binance’s native stablecoin BUSD.

BUSD is a stablecoin issued by blockchain infrastructure company Paxos, approved and regulated by the New York State Department of Financial Services, according to the Paxos website.

The fund represents an attempt by Binance to keep the crypto industry afloat after controversial entrepreneur Sam Bankman-Fried FTX filed for bankruptcy earlier this month.

Zhao has emerged as the new savior for a ailing industry, filling a gap left by Bankman-Fried, whose firm bought or invested in a number of beleaguered crypto firms — from Voyager Digital to BlockFi — before its collapse.

The failure of FTX was partly caused by a tweet posted by Binance’s CEO that drew attention to a CoinDesk report raising questions about its accounting. Following the quick shutdown of FTX two weeks ago, investors are worried about a potential crypto contagion affecting all corners of the industry.

In the first court hearing in the bankruptcy case on Tuesday, a lawyer for the company delivered a condemning verdict to FTX and its management, saying the company was run as Bankman-Freed’s “personal fiefdom.”

Binance stated that the facility is “not an investment fund” and is intended to support companies and projects that are “experiencing significant short-term financial difficulties through no fault of their own.” Zhao has previously said he intends to prevent further “cascading contagion effects” associated with the collapse of FTX.

Binance has stated that it expects the program to run for about six months. Applications are being accepted from investors to contribute additional funds.

Binance stated that it is “flexible in its investment structure” and accepts contributions in tokens, cash and debt. “We expect that in some situations, individual solutions will be required,” the company added.

Around 150 companies have already applied to support the fund, according to Binance.

Cryptocurrency markets did not significantly react to the news. In the past hour bitcoin rose by about 0.2% while Ethereum traded flat during the session.

Low trading volumes are expected in the US as Americans celebrate the Thanksgiving holiday.

Written by khirou

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