Cryptocurrency exchange Binance announced on Thursday that it had set up a major recovery fund that should help companies from the sector recover following the collapse of rival firm FTX.
The company outlined plans for its $1bn recovery fund in a blog post, explaining that the funds allocated to prop up struggling companies may actually increase to $2bn if the need arises.
The fund has already received $50m in commitments from various companies in the sector, including Polygon Ventures, Animoca Brands, and Jump Crypto.
Commenting on the new initiative, Binance CEO Changpeng Zhao said that Binance was firmly committed to ensuring better transparency and sustainability for the cryptocurrency industry at a time when it’s buffeted by regulatory scrutiny and the knock-on effect of the FTX meltdown.
The recovery fund was set up in Binance’s own BUSD stablecoin token which is pegged to the value of the US dollar. Binance hopes that this fund will help the industry remain intact after the shock of FTX’s misuse of billions worth of customer funds.
Binance has refused to buy out FTX, citing significant shortcomings with the rival’s accountancy practices, and describing them as a “black hole”.
Zhao even called Sam Bankman-Fried, the now ex-CEO of FTX, a “madman” who had committed the “ultimate sin”, alluding to the misuse of consumer funds, and thus undermining consumer trust in the cryptocurrency industry.
The FTX saga has prompted some to predict a “crypto extinction” while others have said that the industry will recover slowly.
Binance is in the meantime looking to convince more investors who are willing to invest in cash, debt or cryptocurrency and back up the fund.
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