Binance creates $1 billion fund for crypto industry after FTX collapse

Binance unveils $1 billion fund to keep crypto industry alive

Cryptocurrency exchange Binance on Thursday announced new details on its Industry Recovery Fund, which aims to shore up struggling players following FTX’s disastrous bankruptcy.

In a blog post, Binance said it would provide $1 billion in initial pledges for the recovery fund. It could increase that amount to $2 billion at a later date “if the need arises,” the company added.

It has also received $50 million in commitments from crypto-native investment firms such as Jump Crypto, Polygon Ventures, and Animoca Brands.

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

Binance co-founder and CEO Changpeng Zhao has given several interviews discussing the prospects for the cryptocurrency after a turbulent few weeks in the market.

NurPhoto / Contributor / Getty Images

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

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

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

FTX’s failure was prompted in part by a tweet from Binance’s CEO drawing attention to a CoinDesk report raising accounting issues. Since FTX’s rapid settlement two weeks ago, investors have worried about a potential crypto contagion affecting every corner of the industry.

In Tuesday’s first court hearing for the bankruptcy case, an attorney for the company delivered a scathing verdict on FTX and its leadership, saying the company is run as a “personal fiefdom” of Bankman-Fried.

According to Binance, the vehicle 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 it is his intention to prevent further “cascading contagion effects” arising from FTX’s collapse.

Binance expects the program to last around six months. It accepts requests from investors to contribute additional funds.

Binance said it is “flexible in asset structure” and accepts contributions in tokens, cash and debt. “We understand that individual situations require tailored solutions,” the company added.

According to Binance, around 150 companies have already applied for support from the fund.

The crypto markets did not react significantly to the news. In the last hour, Bitcoin up about 0.2% while Ether traded flat for the session.

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

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