After the FTX crisis pushed the exchange has officially filed documents to claim bankruptcy on November 11, the CEO of the largest crypto exchange to date – Binance, decided to form an industry recovery fund, which will help long-running successful projects.
Zhao emphasized that platforms can reach out to Binance Labs to check their qualification for the market recovery fund, urging other companies to co-invest in the recovery fund and help recover the crypto market.
“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.” CZ explained on Twitter.
Are cryptos in recovery mode after the FTX crash?
The crypto market faces immense pressure, as in 2022 alone, several exchanges, funds, and even leading crypto projects went bankrupt due to liquidity issues The Terra (LUNC) suffered from a major liquidity shortage after its stablecoin side-project, the UST, de-pegged from the U.S. dollar.
The shock created a ripple effect, which many believed to be gone by now, but the recent Three-Arrow Capital case and the latest ordeals with FTX are showing that the turbulence in the crypto sector is severe.
The idea of an industry-wide crypto fund was backed by Celsius‘ largest investor Simon Dixon and Tron founder Justin Sun, which both expressed their positive sentiment for Zhao’s declaration. However, when asked if Binance’s liquidity fund is available for participation from FTX, the CEO of Binance replied that “Liars or fraud never qualify as strong projects.”
“This is for other projects in the ecosystem,” Zhao added, pointing to Binance’s $500 million aid to struggling Bitcoin miners after Bitcoin fell over 75% from its all-time high.
The news caused a 4% price increase for Binance's BNB token, which is worth $280 per token as of press time. BNB's low and high points for the past day have been $268 and $281.77, respectively.
The value of Bitcoin and Ethereum also increased by almost 6% but quickly corrected to their prior levels. Currently, Bitcoin trades at $16,520 per BTC, while the price of Ethereum (ETH) is currently $1,240.
However, the weekly price action remains deeply negative, as most of the cryptos are down over 10%. Bitcoin and Ethereum are down 20% from where their prices were last week, while Solana (SOL), Cronos (CRO), and Algorand are down almost to half of their value a week ago.