Following the demise of rival FTX, cryptocurrency exchange Binance is portraying itself as a stabilizer in digital assets. Changpeng Zhao, the company’s CEO, said on Twitter on Monday that Binance is creating a recovery fund to aid solid cryptocurrency projects that are experiencing brief liquidity difficulties.
The fund will be used to assist cryptocurrency companies who have run into one kind of financial problem or another, according to a tweet sent out on Monday by Binance CEO Changpeng Zhao (CZ). To this end, CZ has made it possible for such suitable enterprises to seek assistance from its investment arm, Binance Labs. Regarding Binance’s plans for the money, 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.”
The announcement of Binance’s action comes as concerns about contagion in the cryptocurrency market are growing. FTX, a cryptocurrency exchange that just filed for chapter 11 bankruptcy, was the main cause of this tragedy. Unprecedented numbers of victims will surely be impacted by the aftermath of the demise of such a massive company as FTX. And that includes entrepreneurs, cryptocurrency investors, decentralized finance (DeFi) ventures, and even smaller exchanges.
As an illustration, a number of companies have already disclosed their exposure to FTX, and many more are anticipated to follow suit in the upcoming weeks. Crypto platform Matrixport, hedge fund Galois, venture capitalist Paradigm, and investor Mechanism Capital are some of those who have disclosed their exposure.
It’s also important to note that many believe Zhao’s tweets about selling FTX’s native token (FTT) were a major factor in the ultimate liquidity issue. Zhao, though, is adamant that in order for the sector to prosper, transparency is essential. Additionally, he promises to criticize competitors more in the future.