- Changpeng “CZ” Zhao, CEO of the cryptocurrency exchange Binance Ltd., announced that the company will launch an “industry recovery fund” to assist projects with liquidity issues.
- This announcement was made by Binance, the largest cryptocurrency exchange by volume, after FTX Trading Ltd., the third-largest exchange by volume, and its corporate structure FTX Group filed for bankruptcy in the United States on Friday.
Changpeng “CZ” Zhao, CEO of the cryptocurrency exchange Binance Ltd., announced that the company will launch an “industry recovery fund” to assist in solving liquidity issues for projects.
Zhao said, “To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund to help otherwise strong projects but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.”
The news came from Binance, the largest crypto exchange by volume, after the third-largest exchange by volume, FTX Trading Ltd., and its corporate structure, FTX Group, filed for bankruptcy in the U.S on Friday.
In the week leading up to FTX’s bankruptcy, Binance attempted to rescue the smaller exchange during a liquidity crisis but withdrew from the deal after realizing it was unable to assist. Binance stated, “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control and ability to help.”
Zhao extended the invitation to other industry investors, stating, “Crypto is not going away. We are still here. Let’s rebuild.”
There are currently no details regarding how the fund will operate or how related projects in “liquidity crisis” will be selected.
Zhao called for new crypto industry regulations during the summit of G20 leaders in Bali. Zhao emphasized that it could be more than just the responsibility of watchdogs or regulators to prevent what occurred with FTX and protect consumers; but the cryptocurrency industry must also self-regulate.
Zhao said, “I think the industry collectively has a role to protect consumers, to protect everybody. So, it’s not just regulators. Regulators have a role, but it’s not 100% their responsibility.”
Meanwhile, he also added that he believes that this needs further regulation.
“No one can protect [from] a bad player, to be very frank, if a guy is very good at lying, and very good at just pretending to be what he’s not,” Zhao added. “[If] somebody wants to violate the law, the law is not going to prevent that. The law can help to reduce that.”
Zhao’s remarks come when global watchdogs and regulators intensify their scrutiny of the cryptocurrency industry. Especially considering the previous issues that have rocked crypto players, such as the collapse of the Terra-LUNA stablecoin ecosystem in May, which wiped nearly USD 60 billion off the market and led to the failure of several crypto hedge funds and lenders.
In October, the Financial Stability Oversight Council, a U.S. regulatory watchdog, issued a report urging increased regulation of crypto assets. And Treasury Secretary Janet Yellen reportedly stated that the implosion of FTX demonstrated “weakness in the entire sector” and called for stricter industry regulations.