Binance recently announced the creation of an “Industry Recovery Fund” following the collapse of FTX and the collateral damage it has caused to the cryptocurrency industry. Several other platforms have indicated they have been impacted by the bankruptcy of FTX, and several have shut down due to the contagion.
The Recover Fund was revealed by Binance founder and CEO Chengpeng “CZ” Zhou, who commented at that time:
“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.”
Bitfinex, one of the larger crypto exchanges, has released a statement commenting on the Binance initiative. Bitfinex CTO Paolo Ardoino, who is the leading spokesperson for the firm, stated:
“While we welcome any initiative to support the digital token ecosystem, we would urge all industry participants to remain true to the tenets of decentralization. At its very inception, Bitcoin has provided an alternative financial system that specifically avoids centralization, and yet is secure and trustworthy. It is, therefore, imperative that industry participants also do not revert to overarching forms of centralized power and control. At Bitfinex, we believe the industry is at its strongest when a diversity of platforms can flourish. Peer-to-peer platforms and decentralized ledger technologies have great potential to further financial freedom, and freedom more generally.”
Ardoino’s comment provides lukewarm support for an industry-backed solution that is centralized. Regardless, the crypto industry is going through a challenging period of criticism and introspection. More regulations are certainly on the way and probably not in the way crypto exchanges will want.
While FTX should shoulder much of the blame for the current bout of crypto contagion, there is an argument to be made that industry leaders should have taken the initiative years ago to create a self-regulatory organization that crafted best practices and set standards for platforms. But then, hindsight frequently provides clarity on topics that perhaps should have been obvious.