Binance, a cryptocurrency exchange, announced new details about its industry recovery fund on Thursday. The fund is designed to help struggling businesses in the wake of FTX's bankruptcy.
Binance has announced that it will commit $1 billion to a recovery fund, with the possibility of increasing that amount to $2 billion in the future if necessary. The fund will be used to help those affected by the recent hack on the exchange.
The company has received $50 million in commitments from crypto-native investment firms including Jump Crypto, Polygon Ventures, and Animoca Brands. This is a significant investment that will help the company continue to grow and expand its reach.
Binance CEO Changpeng Zhao shared the public wallet address showing its initial commitment of around $1 billion in Binance's own BUSD stablecoin. "We do this transparently," Zhao said.
Paxos' website states that BUSD is a stablecoin issued by blockchain infrastructure firm Paxos and is approved and regulated by the New York State Department of Financial Services.
Binance has set up a fund to help support the crypto industry after the controversial entrepreneur Sam Bankman-Fried's exchange FTX filed for bankruptcy earlier this month. This is an attempt by Binance to keep the crypto industry afloat and ensure its continued success.
Zhao has emerged as a new figurehead for the ailing industry, filling a gap left by Bankman-Fried, whose firm had bought or invested in a number of struggling crypto firms — from Voyager Digital to BlockFi — prior to its collapse.
The failure of FTX was partially caused by a tweet from Binance's CEO, which brought attention to a CoinDesk report that raised questions about FTX's accounting. Since FTX's rapid wind-down two weeks ago, investors have been worried about a possible crypto contagion that could affect every part of the industry.
At the first court hearing for the bankruptcy case on Tuesday, a lawyer for the company delivered a scathing assessment of FTX and its leadership, saying the company was run as the "personal fiefdom" of Bankman-Fried.
Binance stated that the vehicle is not an investment fund and is intended to support companies and projects that are facing significant, short term, financial difficulties. Zhao said that it is his intention to prevent further "cascading contagion effects" stemming from FTX's collapse.
Binance said that it is expecting the program to last for approximately six months and is currently accepting applications from investors who are interested in contributing additional funds.
Binance is willing to work with investors to find the best solution for them, whether that be in tokens, cash, or debt. The company recognizes that every situation is different and requires a unique solution.
Binance has announced that around 150 companies have already applied for support from its new fund. This is a great sign for the future of the project, as it shows that there is significant interest from the business community.
Crypto markets have not reacted significantly to the news. In the past hour, bitcoin has increased by about 0.2%, while ether has remained flat.
Low trading volumes are expected in the U.S. as Americans celebrate the Thanksgiving holiday.
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