Binance to launch ‘industry recovery fund’ for troubled crypto projects

The world’s largest crypto-currency exchange by trading volume, Binance, has revealed plans to launch an industry recovery fund. The fund aims to resurrect the crypto industry from its ongoing downtime. This follows a new shadow of doubt cast over the industry following FTX’s financial problems, which ultimately led to it declaring bankruptcy last week.

Details on industry stimulus fund

According to a tweet posted on Monday by Binance CEO Changpeng Zhao (CZ), the fund will be used to help crypto-currency companies that have found themselves in one financial problem or another. To this end, CZ has given eligible companies the opportunity to approach its investment arm Binance Labs for assistance. About Binance’s intentions for these funds, CZ said:

“To further reduce the cascading negative effects of FTX, Binance is forming an industry recovery fund to help projects that are otherwise strong, but in a liquidity crisis.”

In another tweet, the CEO also made a rallying call to crypto investors who might be interested in supporting the industry investment fund. He says they are welcome to contribute to the fund and promised to share more details as they come.

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Contagion fears on the rise

The news of Binance’s intervention comes at a time of rising contagion fears within the crypto industry. Mainly due to the incident with crypto exchange FTX which recently filed for Chapter 11 bankruptcy. As expected, the fallout from the collapse of a giant like FTX, will undoubtedly affect an unprecedented number of victims. And that includes decentralized finance (DeFi) projects, crypto-currency investors, startups, and even smaller exchanges.

As a result, some companies are already declaring their exposure to FTX, and many more are expected to do so in the coming weeks. Among those that have declared their exposure are crypto-currency platform Matrixport, hedge fund Galois, venture capitalist Paradigm, and investor Mechanism Capital.

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Meanwhile, it’s worth mentioning that many are of the opinion that Zhao’s tweets about the sale of FTX’s native token (FTT), were largely responsible for his eventual liquidity crisis. However, Zhao insists that transparency is necessary for the industry to thrive. He also promises to be more critical of his rivals in the future.

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