Image courtesy of Binance Twitter page
- CZ is looking to build a “Market Recovery Fund” to help fundamentally strong projects from falling apart due to liquidity crises.
- The Binance chief also raised the demand for establishing a global standard for the working of digital assets.
With the FTX collapse completely shaking the crypto world, existing market players are looking to bring the crypto industry out of the shock of this crisis. A few hours back, Binance chief Changpeng “CZ” Zhao announced a multi-billion dollar “market recovery fund” to help industry players facing a liquidity crisis. The Binance chief said:
To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon.
In the meantime, please contact Binance Labs if you think you qualify. Also welcome other industry players with cash who wants to co-invest. Crypto is not going away. We are still here. Let’s rebuild.
A user named @cryptoking said that FTX’s liquidity was “insolvent” since they used their native crypto FTT as collateral to loans offered by the sister hedge fund Alameda Research. Thus, the user added that FTX would never qualify as a “strong project”.
To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify. 1/2
— CZ 🔶 Binance (@cz_binance) November 14, 2022
Responding to this, CZ said: “Liars or fraud never qualify as strong projects. This is for other projects in the ecosystem”. Tron founder Justin sun immediately backed this idea adding that they would join CZ’s “initiative to participate in this industry recovery fund and help good builders and developers to recover from the crisis!”
FTX collapse and demand for global crypto standards
Last Friday, November 11, FTX chief Sam Bankman-Fried for Chapter 11 bankruptcy while stepping down as the CEO of the company. CZ compared this event to the 2008 financial crisis adding that it could have a “cascading effect” across the industry. While speaking at a conference in Indonesia last weekend, the Binance chief said:
I think that’s probably an accurate analogy. With this type of event happening, it’s devastating for the industry. A lot of consumer confidence is shaken, and I think basically it sets us back a few years.
With FTX going down, we will see cascading effects. Especially for those close to the FTX ecosystem, they will be negatively affected.
CZ also said that the FTX collapse could lead to more regulatory scrutiny in the crypto space adding that it is “probably a good thing, to be honest”. Binance was earlier in the race of acquiring the non-U.S. assets of FTX. However, it immediately canceled the deal following the reports over the misuse of customer funds by FTX and scrutiny by the U.S. SEC.
During the Indonesia conference, CZ also spoke about a collective effort in establishing global standards for the crypto space. “As an industry, we need to increase transparency. We need to work very closely with regulators all around the world to make this industry more robust. There is a strong role for regulators to play but we can’t blame this on any single party,” he said.
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