Following the recent crypto liquidity crisis caused by the collapse of FTX, CEO of Binance Changpeng Zhao in a bid to help projects who are otherwise strong but in a liquidity crisis has disclosed that the firm is setting up an ‘Industry Recovery Fund’.
In a statement made via a Tweet, he said, “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.
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. 1/2
— CZ ? Binance (@cz_binance) November 14, 2022
“Crypto is not going away. We are still here. Let’s rebuild,” he added.
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The Binance CEO also stated that other industry players with cash are welcome to co-invest in the project to mitigate the liquidity of cryptocurrencies in the market.
Following his recent announcement, it has led to a surge in the price of Bitcoin and the overall crypto markets. Bitcoin surged from a 24-hour low of $15,906 to a high of $16,580 while Ethereum bounced from a 24-hour low of $1,180 to a high of $1,233.
Also, while speaking at a summit in Bali, in a gathering of G20 leaders, the CEO called for new but stable rules and regulations for the industry, noting that new players in the industry are cutting corners, without following due processes.
In his words, “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”.
The FTX collapse which saw it lose over $ 2 billion in value of FTT token, wiping out approximately $100bn from the crypto market cap has no doubt landed a big blow to the crypto industry.
Given FTX’s high profile, which saw it strike deals with sports stars like Tom Brady and a massive $135 million deal to rename the Miami Heat stadium, there are fears that its collapse will have a cascading effect on the entire industry, with more big firms predicted to follow the same path.
In a recent event, the company’s CEO Sam Bankman-Fried filed for Chapter 11 bankruptcy after the dramatic events that saw the exchange platform face a liquidity crunch which led to the freeze of withdrawals after customers rushed to get their funds off the trading platform.
There are reports the firm may have used customers’ deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research, a violation of US securities law.
Currently, the collapse has sent panic to businesses and organizations that have made investments in the platform, as they face the risk of their funds vanishing after FTX halted withdrawals of funds.
Recall that Binance tried to rescue the platform but walked away from the deal after it stated that the company has so many issues beyond its control, majorly manhandling of customers’ funds.
Financial Experts and industry players have disclosed that the FTX crash has posed a serious challenge to the crypto industry, stating that it will take a long time before it recovers.
“This was one of the most trusted entities in the crypto space, so it will take some time to recover”, said Jay Jog, co-founder of Sei Labs.