Binance announces ‘Industry Recovery Fund’ to help cash-strapped projects
The crypto-industry has been trying to wrap its head around the unexpected collapse of the world’s second-largest crypto exchange FTX. On one hand, investors are anxious about the safety of their funds on centralized exchanges. On the other hand, traders are scrambling to place trades in order to maximize their profits in this volatile market.
The two scenarios outlined above have a combined effect on crypto-projects that threaten their very existence. While it makes sense for generic projects that have nothing unique to add to the industry to go down in times of chaos and turmoil, the ones that are actually trying to make a difference have found themselves caught in the crossfire as well.
Industry recovery fund to help strong projects
The world’s largest crypto-exchange has come out in support of such projects. Binance CEO Changpeng Zhao has announced that his exchange will establish an ‘industry recovery fund,’ one that will help the industry offset the damage dealt by FTX’s collapse.
The fund is aimed at helping crypto-projects that are facing liquidity issues, but are fundamentally sound. “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,” Zhao tweeted.
CZ has asked projects to get in touch with Binance Labs to see if they qualify to be a beneficiary of the recovery fund. He has also encouraged cash-rich industry players to co-invest in this venture.
Tron founder Justin Sun soon responded to Zhao’s initiative, indicating that he will participate in the proposed recovery fund.
Binance: Last man standing
The latest move by Binance has strategically positioned the exchange as crypto’s new white knight, a title once bestowed upon Sam Bankman-Fried. The crypto-community has acknowledged CZ’s role in taking down a bad actor that would’ve caused more damage in the long run. CZ is also responsible for starting the trend among exchanges of publishing proof of reserves.
Binance has been rather active in its PR efforts ever since FTX collapsed. From its CEO warning against suspicious on-chain activity to their $1 billion Safe Asset Fund for Users (SAFU) top up last week to enhanced insurance for their users in case of an emergency.
Recent initiatives by Binance, combined with previous measures to engage with governments of various countries through their Global Law Enforcement Training Program, will definitely see their influence expand.
Binance was in the news earlier this year for leading a $150 million funding round to bail out the popular play-to-earn game Axie Infinity. This, after it fell victim to a hack that led to a loss of $615 million.
From a business perspective, the recovery fund is a rather smart move by the exchange. A bear market is undoubtedly the best time to invest and acquire stakes at a discount. Rather than going around looking for projects to invest in, Binance will see projects lining up to offer up a percentage of their business in exchange for cash.
