Binance CEO Announces $1 Billion Fund For Distressed Crypto Assets
Changpeng Zhao (CEO of Binance) has recently announced a $1 billion fund which will be used to help distressed crypto projects. He also added that if this $1 billion is not sufficient, they will allocate more funds.
After the collapse of FTX, the sentiment surrounding cryptocurrencies was very negative. But news like this will most definitely improve the investor's sentiment towards crypto, which is an already risky asset class.
The reason behind pledging such a huge amount of money is to fill any liquidity gaps that could arise from the FTX's implosion.
Recovery Fund - To Be Used In Liquidity Crisis
Zhao commented on how their current approach is not a strict one which will allow different players from the crypto industry to contribute towards the fund.
This news is coming on the backdrop of the FTX collapse, which failed to cover an $8 billion liquidity shortfall. As a result, the crypto firm eventually filed for bankruptcy along with its 130+ entities.
Overall, the FTX group had more than 130 entities, and after the bankruptcy, all of them went down. Sam Bankman-Friend, who was the CEO of the FTX group, has already stepped down from his role.
The downfall of FTX raised numerous risks for the crypto markets. And according to Mr Zhao, it is a pain whenever a crypto player goes down.
And this is the reason why the Binance CEO has committed close to $1 billion - He believes this fund will alleviate the negative effects of the FTX collapse.
As for when the fund will be launched, Mr Zhao said that it would be launched within a short span of time. He also commented that the crypto industry needs to be saved today and not in the year 2023!
But considering the risks faced by the crypto markets today, it seems that it would take more than an odd $1 billion to save it! Especially with all times high-interest rates in the USA and other economic markets, things are not looking good for cryptocurrencies.