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Binance wants to help crypto firms currently facing liquidity crisis.
The world’s largest cryptocurrency exchange by trading volume Binance has revealed plans to launch an industry recovery fund. The fund is aimed at resuscitating the crypto industry from its ongoing downtime. This follows after a new shadow of doubt was cast over the industry in the wake of FTX’s financial troubles, which ultimately led it to declare bankruptcy last week.
Details about the Industry Recovery Fund
According to a Monday tweet by Binance’s CEO Changpeng Zhao (CZ), the fund will be used to help crypto firms that have found themselves in one financial trouble or the other. To this effect, CZ has thrown open the opportunity for such firms that are eligible, to reach out to its investment arm Binance Labs, for help. About the intentions of Binance for the funds, CZ said:
“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.”
In another tweet, the CEO also made a rallying call to crypto investors who might be interested in supporting the industry investment fund. He says they are welcome to contribute to the fund and promised to share more details as they unfold.
Contagion Fears on the Rise
The news of Binance’s intervention is coming at a time when contagion fears are rising within the crypto industry. Primarily because of the incident with crypto exchange FTX which recently filed for chapter 11 bankruptcy. Expectedly, the fallout from the collapse of such a giant as FTX, will undoubtedly affect an unprecedented amount of victims. And that includes decentralized finance (DeFi) projects, crypto investors, startups, and even smaller exchanges.
For instance, some firms are already declaring their exposure to FTX, with many more expected to do the same over the coming weeks. Among those that have declared their exposure are; crypto platform Matrixport, hedge fund Galois, venture capitalist Paradigm, and investor Mechanism Capital.
Meanwhile, it is worth mentioning that many are of the opinion that Zhao’s tweets about selling FTX’s native token (FTT), were largely responsible for its eventual liquidity crisis. However, Zhao insists that transparency is necessary for the industry to thrive. He also vows to be more critical of rivals going forward.