While the crypto industry is still reeling from the sudden implosion of the crypto exchange FTX, investors are increasingly worried that FTX contagion will spread to other exchanges. Since the collapse of FTX two weeks ago, crypto lenders like Genesis and BlockFi have stopped lending and also paused customers’ withdrawals.
Now, the world’s largest crypto exchange Binance is aiming to reassure jittery customers and restore faith in the crypto industry with a pledge to help struggling crypto firms. The move comes at a time when the entire crypto market is facing the ripple effect of the now-bankrupt FTX.
Binance CEO Changpeng Zhao (CZ) announced Thursday that his company is committing a $1 billion fund to bail out distressed crypto companies as FTX contagion spreads. The fund will be used to create an industry recovery initiative (IRI) to invest in companies from the digital assets sector.
Just a day after the announcement, CZ announced this morning another $1 billion, making a total of $2 billion. In a post on Twitter, CZ said: “Yesterday, #Binance allocated ANOTHER $1 billion to the industry recover initiative. All in BUSD.”
Yesterday, #Binance allocated ANOTHER $1 billion to the industry recover initiative. All in BUSD.
— CZ 🔶 Binance (@cz_binance) November 25, 2022
The crypto exchange giant also clarified that an initial $1 billion BUSD deposit for the recovery fund comes from Binance’s own assets. But the details of the transferring wallet quickly raised questions on Twitter. Some within the community were also concerned that Binance might have used customer assets to fund the initiative.
Responding to CZ’s tweet, Twitter user DegenSpartan said: “if you check etherscan, it is tagged as binance 7 and industry recovery initiative.”
if you check etherscan, it is tagged as binance 7 and industry recovery initiative https://t.co/YhxA4nNIKx
— 찌 G 跻 じ 𝙎𝙚𝙣𝙥𝙖𝙞 of the 𝙃𝙚𝙣𝙩𝙖𝙞 (@DegenSpartan) November 25, 2022
On November 8, Binance reached a non-binding agreement to buy crypto exchange FTX. But the world’s largest crypto exchange backed out of the deal after it learned that FTX’s financials are in much worse shape than let on.
We covered Binance many times on our platform. Zhao, who was born in China, emigrated to Canada at the age of 12. He co-founded Binance in 2017 with his friend Yi He.
Before founding Binance, CEO Changpeng Zhao previously founded Fusion Systems in 2005 in Shanghai; the company that built high-frequency trading systems for brokers. In 2013 he joined Blockchain.info as the third member of the cryptocurrency wallet’s team. He also worked at OKCoin as CTO for less than a year, a platform for spot trading between fiat and digital assets.