Binance, the cryptocurrency exchange with the most users in the world, created a restructuring fund for the industry after the fall of FTX, one of its main competitors. Some specialists pointed to the involvement of the giant led by its CEO, Changpeng “CZ” Zhao, in the debacle of the Sam Bankman-Fried company. He now decides to bet on the purchase of projects and yesterday he announced that he doubled the capital invested in the fund in less than 24 hours: he added an additional US$1 billion.
With this capital, the fund, which will be used to assist projects suffering from liquidity problems, was made up of about US$2 billion, divided between three tokens: about 65% in BUSD (Binance’s stablecoin), 20% in BNB (the company’s token) and 15% in bitcoin. The additional assignment was “CZ” Zhao, on his Twitter account.
Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group, along with other prominent crypto companies have joined Binance’s initiative and will contribute $50 million to the fund. They have not yet communicated what the project selection processes will be like.
The recovery fund would be used to buy distressed crypto assets and “support the industry.” The cryptocurrency market has seen a massive decline since the beginning of the year, which has driven several cryptocurrency companies out of business.
Following the FTX crash, bitcoin plunged to its lowest level in two years and other digital assets were down as well following the sudden collapse of the FTX Trading platform. Many projects were associated or affected by the company since they had assets invested within their system, for example. In addition, the crisis of confidence led to increased demand for withdrawals from clients.
The “IRI” will not be an investment fund, but rather a “co-investment opportunity for organizations willing to support the future of Web 3.0,” according to BloombergTV. Participants who want to participate will have to reserve a committed capital in a public address. The fund may explore the possibilities for traditional financial institutions to find an alternative commitment mechanism if they are unable to send money to a public address.
Earlier in the month, Binance had announced its intentions to sign a non-binding agreement to acquire FTX, one of its main rivals. The objective was to save it from the crisis that had begun a week ago, in a year in which the stability and financial health of the sector was put under the magnifying glass. However, towards the end of the day, he regretted it.
According to the official statement, the decision was made due to an accumulation of factors. Partly as a result of corporate due diligence and after learning of the latest reports of “mishandling of customer funds.” The same is due to the “alleged” investigations carried out by the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission.