- Binance announced that it will make an initial commitment of $1 billion to the Binance recovery fund.
- The company added that it could raise that sum to $2 billion at a later date “if the need arises.”
- Investors have been concerned about a crypto contagion spreading to the entire industry since FTX’s abrupt shutdown.
Binance Recovery Fund
In the wake of FTX’s disastrous bankruptcy, struggling players are looking for support, and cryptocurrency exchange Binance on Thursday provided more information about its industry recovery fund ( Binance recovery fund).
Binance announced in a blog post that it will make an initial $1 billion commitment to the recovery fund. The company added that if the need arises, it may eventually increase that amount to $2 billion.
Additionally, investment companies focused on cryptocurrencies like Jump Crypto, Polygon Ventures, and Animoca Brands have committed $50 million to the project.
Changpeng Zhao, CEO of Binance, shared the public wallet address demonstrating the company’s initial commitment and stated: “We do this transparently.” CNBC’s review of public blockchain data revealed a balance of about $1 billion in Binance’s own BUSD stablecoin.
According to the website of blockchain infrastructure provider Paxos, BUSD is a stablecoin that has been approved and governed by the New York State Department of Financial Services.
Binance created the fund in an effort to support the cryptocurrency market after FTX, the controversial exchange founded by businessman Sam Bankman-Fried, declared bankruptcy earlier this month.
Zhao has emerged as a new savior-like figure for the struggling industry, filling the void left by Bankman-Fried, whose company had purchased or invested in several troubled crypto firms — from Voyager Digital to projects like BlockFi — before its collapse.
A tweet from the CEO of Binance drawing attention to a CoinDesk article casting doubt on FTX’s accounting was a contributing factor in the failure of the exchange. Since FTX’s abrupt closure two weeks ago, investors have been concerned about the possibility of a crypto contagion spreading to every aspect of the industry.
FTX and its management received a damning assessment from the company’s attorney during the first court hearing for the bankruptcy case on Tuesday, claiming that Bankman-Fried ran the business as his “personal fiefdom.”
The vehicle, according to a statement from Binance, “is not an investment fund” and is meant to assist projects and businesses that “through no fault of their own, are facing significant, short-term financial difficulties.” Zhao previously said he wanted to stop any additional “cascading contagion effects” brought on by the demise of FTX.
Binance stated that it expects the program to run for about six months. Investor requests to contribute more money are currently being accepted.
According to Binance, it is “flexible on the investment structure” and welcomes contributions in the form of debt, cash, and tokens. We anticipate that unique circumstances will necessitate tailored solutions, the business said.
According to Binance, about 150 companies have already requested assistance from the fund.
The news had little impact on the cryptocurrency market. While ether’s price was flat for the session, bitcoin gained 0.2% over the last hour. The U.S. is expecting low trading activity as people celebrate Thanksgiving.
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