The CEO of Binance has announced creating a recovery fund to “help projects that are solid but are in a liquidity crisis”. The goal is to prevent a domino effect stemming from the bankruptcy of FTX, which filed for bankruptcy last Friday.
The executive assured a second tweet that The fund is open to possible investments from other players in the sector. Justin Sun, founder of Tron, answered shortly after in a tweet that Tron, Hub Global and Poloniex would join the initiative.
Neither party has communicated more information in this regard at the moment. However, Changpeng “CZ” Zhao, the CEO of Binance, assures that more details will be given soon. It has also invited those projects that want to benefit from this recovery fund to contact Binance Labs.
Binance’s mission: avoid collapse
The recent crash of FTX, founded in 2019 and considered one of the exchanges most popular in the world, It is one more blow to an industry that has found in this 2022 one of the worst years in its history. Projects like Luna, Celsius or Three Arrows Capital They have caused notorious losses to their clients. Simultaneously, the value of the most popular currencies (Bitcoin, Ethereum, etc.) has plummeted by around 60% so far this year.
This adverse situation has caused liquidity problems in several companies in the sectorgenerating a kind of spiral that, if not stopped, can affect even the most resistant in the industry.
Binance, in this scenario, tried to acquire FTX, providing it with the necessary solvency. However, after studying the company’s books, he decided to back down. The announcement of this new recovery fund is, in a way, an alternative way of helping a sector that is going through its most complicated time in years and, also, to look after its own interests, since the deterioration of the sector would also harm Binance.