Cryptocurrency- Binance CEO Changpeng Zhao is launching a fund to aid crypto projects that need liquidity, following FTX's collapse last week.
- "Crypto is not going away. We are still here. Let's rebuild," Zhao told his nearly 8 million Twitter followers.
The head of Binance is launching a fund to aid crypto projects in need of financial backing in the wake of the stunning implosion of crypto exchange FTX and the empire built by Sam Bankman-Fried.
"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," Binance CEO Changpeng Zhao wrote to his 7.6 million followers on Twitter on Sunday.
The cryptocurrency market has been rocked by contagion fears as FTX, once the third largest crypto exchange in the US, collapsed last week after the company failed to plug a shortfall of up to $8 billion in a liquidity crunch. FTX filed for Chapter 11 bankruptcy protection on Friday, along with 130 other affiliated entities that made up the Bahamas-based FTX Group.
"Crypto is not going away. We are still here. Let's rebuild," Zhao said Sunday, aiming to soothe nerves as FTX users have been scrambling to pull their money out of FTX. Cointelegraph reported that some users were trying to use non-fungible tokens, or NFTs, to get their money out.
Other industry players "with cash who wants to co-invest," were welcome to work with Binance Labs on the project, Zhao, also known as CZ, said.
FTX's books were thrown into the spotlight after a November 2 CoinDesk report revealed that Alameda Research, FTX's trading arm, relied heavily on illiquid cryptocurrencies the company carried on its balance sheet. Bankman-Fried later asked Zhao, for a deal to stave off a liquidity crisis. Binance agreed last Tuesday to a tentative agreement to bail out FTX, but a day later it walk away from the deal.
The crypto market's valuation has slumped by 20% to $843.1 billion since November 6, when Zhao on Twitter said Binance was liquidating any remaining holdings of FTX's native token, FTT, on its books "due to recent revelations that have came to light." Zhao said Binance had about $2.1 billion worth of FTT and BUSD, a stablecoin issued by Binance and Paxos.
"Full disclosure: Binance never shorted FTT. We still have a bag of as we stopped selling FTT after SBF called me. Very expensive call," Zhao wrote on Twitter on Sunday.