Binance has revealed the company is planning to launch an “industry recovery fund”, to help crypto projects overcome possible liquidity crises.
In the wake of the FTX aftermath, the cryptocurrency industry faces a serious of broader contagion. Several companies and users have millions stuck on the crypto exchange that is reeling under a severe liquidity crisis owing to surge in withdrawals. It seems just as the the contagion from the fall of Terra/Luna spread across the crypto ecosystem earlier this year, the collapse of FTX is likely to trigger wide rammification in the digital assets sector.
Recovery Fund to Reduce Negative Effects of FTX Crisis
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
Amidst the ongoing financial uncertainity, Binance CEO Changpeng “CZ” Zhao announced a recovery fund to assist crypto platforms that are facing a shortage of cash. Zhao took to Twitter to reveal that companies that have a strong business model but are facing a cash crunch owing to the fall of FTX will be eligible to use the recovery fund to protect its customers.
CZ added that further details regarding the initiative will be disclosed in the coming days while advising affected companies to contact Binance Labs. The Binance CEO also urged other industry players who would like to co-invest in the recovery fund in order to strengthen and rebuild the crypto industry. Zhao tweeted,
“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.”
Other Industry Players Express Support
Tron founder Justin Sun was among the first to express his support for the new initiative highlighting that his two exchanges, Huobi Global and Polonie would also take an active participation in the recovery fund. The announcement comes on the heels after Binance Pool disclosed a $500 million fund in the form of a lending facility for struggling Bitcoin (BTC) miners, last month.
— H.E. Justin Sun🌞🇬🇩🇩🇲🔥 (@justinsuntron) November 14, 2022
On the other hand, in a statement at the B20Summit in Indonesia, CZ emphasized that Binance is also anticipating to set up a global cryptocurrency association that intends to uphold stingent industry standards. He has also called for new but stable and clear regulations for the entire crypto industry. Zhao said,
“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.”