Reserves so that a crisis of this type does not occur again. Changpeng Zhao, the CEO of Binance, announced a few minutes ago that a common emergency fund would be created in order to protect companies in the ecosystem in the event of a liquidity crisis. What will it look like and is it enough to save the reputation of exchanges?
An emergency fund to prevent liquidity crises
Binance CEO proposed this emergency fund on Twitter, and invited other companies in the ecosystem to participate :
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. 1/2
— CZ 🔶 Binance (@cz_binance) November 14, 2022
“To reduce the cascading effects of FTX, Binance Forms Industry Rescue Fundin order to help projects that are solid, but find themselves in a liquidity crisis.»
Companies that believe they can participate are encouraged to contact Binance Labs, the company’s investment fund. For the moment, we have no information on the amount targeted by this fund, nor on the players who will eventually join it.
👉 To go further – Who is Changpeng Zhao (CZ), the founder of the Binance empire?
The French unicorn of crypto wallets 🔒
A complete crypto experience, from buying to securing
Binance is increasing shares in recent days
The crisis initiated by the fall of FTX is unprecedented for the crypto industry. Faced with these uncertain times, Changpeng Zhao and Binance have announced several measures, which aim to both reassure the ecosystem, and to position the company as a solid pillar. A few days ago, we learned that the platform was feeding its internal emergency fund to the tune of 1 billion dollars.
The next day, Binance revealed its reserves: the company has more than 70 billion dollars worth of cryptocurrencies. Enough to get through a few crises of this type… And position yourself wisely to help the ecosystem.
🔴 LIVE – Follow the FTX deal in real time
The emergency fund proposed by Binance of course raises the question of the solidity of the companies that will be saved. What criteria will be used? Can we consider that FTX was solid, when we learn that many actions were hidden from internal teams? Moreover, this only reinforces the hegemony of Binance, which through this emergency fund could decide which of its competitors will survive, and which will be saved.
Anyway, all this shows the exceptional nature of this moment. If the Terra (UST) case has shown one thing, it’s that ricochets can affect large companies. This new ecosystem crisis is therefore approached with great caution.
👉 Also Read – Elon Musk Speaks About Sam Bankman-Fried and FTX
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Source: Changpeng Zhao via Twitter – Image: Web Summit via Flickr (CC BY 2.0)
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