FTX’s liquidity ordeal and eventual bankruptcy declaration last Friday is unarguably a disruptive hit to the stability of the cryptocurrency market. While FTX’s users directly lost billions in stuck crypto-assets, even non-users were indirectly affected as the incident triggered downside pressure to major cryptocurrencies, like Bitcoin.
Binance forms industry recovery fund initiative to cushion crypto projects
To this moment, investors’ anxiety still lingers following several market information and on-chain data that spook this contagion could spread to other cryptocurrency projects. On a positive note, however, the largest crypto exchange Binance is stepping in with an “industry recovery fund” initiative to “reduce further cascading negative effects of FTX.”
Binance CEO, Chengpeng Zhao, revealed the new development in a tweet on Monday, stating that the industry recovery fund will target “strong” ecosystem projects in a liquidity challenge. However, crypto projects and companies like FTX that engage in dubious and fraudulent practices would not qualify for the so-called Industry Recovery Fund.
“Binance is forming an industry recovery fund, to help projects who are otherwise strong but in a liquidity crisis. More details to come soon,” Zhao said. “Liars or fraud never qualify as strong projects. This is for other projects in the ecosystem.”
Among other things, the Binance-led industry recovery fund initiative would help to shore up cryptocurrency projects exposed to FTX collapse, which would essentially help sustain prices from further plunging.
Who’s joining the Binance industry recovery fund initiative?
Binance CEO said the initiative is open to other industry players with cash, who are willing to co-invest. Justin Sun is among the first people that indicated interest to partake in the initiative. Sun precisely noted that Tron DAO, Huobi exchange, and Poloniex, “will participate in this industry recovery fund and help good builders and developers to recover from the crisis.”
Other notable industry figures like Simon Dixon are also willing to join the initiative.