Binance to Build Crypto Recovery Fund, Calls Industry Players to Join

Binance CEO Changpeng Zhao announced a recovery fund that would help crypto projects during moments of crisis, with more crypto players likely to join his effort. Meanwhile, FTX continues to add to the bearish pressure even after its bankruptcy.

Binance CEO Announces Recovery Fund, Calls for Regulation

The FTX collapse has triggered a massive crypto selloff, with Bitcoin declining below $16,000 for the first time in two years. Now industry leaders are trying to appease the situation and bring back confidence in digital assets. Interestingly, Binance CEO Changpeng Zhao (CZ) seems to end up as a big winner in all this mess, with many crypto market participants regarding him as a true leader.

This status was consolidated once again when CZ called for the creation of a crypto recovery fund, which would help crypto projects dealing with liquidity crises. While Binance is set to launch the fund soon, CZ invited other crypto exchanges and industry players to join the effort.

“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,” CZ tweeted on Monday.

Binance hasn’t revealed more details about the potential size of the fund.

Tron founder Justin Sun said that Tron, as well as crypto exchange operators HTX and Poloniex would support Binance in its initiative.

Besides calling for an industry-wide recovery plan, CZ also encouraged stable and clear regulations to stop participants from “cutting corners.”

Speaking at a gathering of G20 leaders in Bali, he said that the crypto industry was new, which is why things might go crazy.

“We do need some regulations, we do need to do this properly, we do need to do this in a stable way,” he reportedly said.

However, even when regulation is all set and ready, bad players may be able to find loopholes. The Binance boss told G20 leaders:

“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. [If] somebody wants to violate the law, the law is not going to prevent that. The law can help to reduce that.”

Moreover, as per CZ, regulators should not carry the entire burden. The industry collectively has a role in protecting consumers.

“Regulators have a role but it’s not 100% their responsibility,” Zhao stated.

Following CZ’s announcement, Bitcoin surged on Monday from a daily low of $15,875 to a daily high of over $17,000 before correcting.

The FTX Saga Goes Worse than Worst

Centralized exchanges and other crypto companies have to address the confidence damage after the collapse of FTX, which was the second-largest exchange after Binance. FTX, led by former billionaire Sam Bankman-Fried, filed for bankruptcy last Friday after users withdrew about $6 billion in crypto tokens in 72 hours.

FTT, the native token of FTX, currently trades at $1.34, down from over $25 at the beginning of the month. The FTX collapse came after Coindesk reported on the balance sheet of FTX’s sister company, Alameda Research, which raised eyebrows. Binance triggered the actual collapse when it said it would liquidate its FTT holdings. CZ’s exchange wanted to come to the rescue by acquiring the exchange in free fall but eventually gave up.

As the bankruptcy wasn’t bad enough, on Saturday, FTX has apparently been hacked, although the more plausible scenario is that the operation has been orchestrated by insiders. About $600 million has been drained from FTX after it filed for bankruptcy. FTX executives said over the weekend that the platform had been compromised, asking users not to install any new upgrades and delete all FTX apps altogether.

Many FTX wallet holders saw their FTX and FTX US balances showing nothing. On-chain data shows that multiple ETH, SOL, and BNB tokens exited FTX’s official wallets and moved to DEXes like 1inch.

As for Sam himself, he doesn’t bring more clarity, as he is tweeting weird messages. Today, he started a thread with three tweets so far saying: “What,” “H,” and “A.”

Binance, HTX, and other exchanges have blocked FTT deposits.

Crypto Exchanges Become More Transparent

Meanwhile, crypto exchanges are in a rush to ensure their customers that their funds are in good hands, and Binance has made the first step again.

Binance revealed more details about its cold and hot wallets, according to a recent post. It turns out that the exchange holds about $75 billion worth of tokens. $23 million of them are in BUSD, its stablecoin, and $6.4 billion in Binance Coin.

Other crypto players would probably follow CZ’s move, especially Crypto.com, which had to admit that it had accidentally sent over $400 million in ETH to the wrong wallet. The panic these days is so big that crypto investors expressed worries about potential contagion, which could explain Crypto.com’s move. However, CEO Kris Marszalek said Sunday that the transfer of 320,000 ETH had been made three weeks ago to a corporate account Gate.io, instead of to one of its cold wallets.

Even though the funds were recovered, some users have rushed to withdraw their funds being worried that the platform could collapse like FTX.

In an AMA (ask me anything) session on YouTube, Marszalek said that Crypto.com had a “tremendously strong balance sheet” and that it had a completely different approach than FTX.

“We never engage as a company in any irresponsible lending practices, we never took any third-party risks. We do not run a hedge fund, we do not trade customers’ assets. We always had 1-to-1 reserves,” he said.

Crypto.com is a Singapore-based crypto exchange that boasts over 70 million users worldwide.