Chengpeng “CZ” Zhou, the founder and CEO of Binance, announced a new “Industry Recovery Fund” following the collapse of FTX and the affiliated collateral damage that has harmed numerous crypto firms.
Revealed via Twitter, CZ stated:
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
He invited any industry players with money who want to participate in the fund or “co-invest,” thus alluding to participating in bailout opportunities that may generate returns over time.
CZ added that “crypto is not going away” adding “let’s rebuild.”
Meanwhile, the dust is yet to settle on FTX which has filed for bankruptcy alongside many affiliated firms. A new CEO with bankruptcy experience has been appointed to manage the platform and its remaining assets. Many reports indicated there was at least an $8 billion shortfall in funds following revelations that FTX was lending money to FTX founder Sam Bankman-Fried’s trading firm, Alameda Research. The loans were said to be collateralized with FTX’s native token FTT, which has collapsed in value. At the beginning of the month, FTT traded above $26 dollar. Today it stands at less than two bucks. CZ shared today that Binance has been stuck with FTT as they “still have a bag.”
Some observers wonder if more firms will follow FTX down the solvency hole.
The crypto industry has long been in need of regulatory clarity, but most of the blame must be shouldered by industry leaders that failed to create a self regulatory organization (SRO) that could have established best practices and transparency rules. Another looming question is will the recovery fund end up being too little, too late?