Binance CEO Changpeng Zhao has announced that his company will launch a recovery fund to stabilize the cryptocurrency industry.
Zhao said the fund’s main objective will be to “mitigate further widespread negative impacts of FTX.” The exchange’s significant integration into the industry means its collapse will be widely spread, the Binance CEO said last week.
He said the funds would go to support projects affected by these impacts but were otherwise financially sound.
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The Binance CEO encouraged others within the industry to contribute as well to support its survival and recovery. This immediately drew interest from prominent crypto industry participants such as Justin Sun and Simon Dixon.
Tron founder Sun, who recently became an advisor to Huobi, said that these exchanges with Poloniex will support Zhao’s initiative. Meanwhile, Dixon also expressed support, but warned that it should not be overly centralized.
Zhao stresses the need for transparency
Zhao told business leaders in Bali that the cryptocurrency industry had a responsibility to “protect consumers”. Binance CEO called for greater regulation of the sector, but implying that it cannot protect against “bad players”.
As a result, Zhao said the industry needs to emphasize transparency, for example when his exchange Binance disclosed its reserves. Other exchanges followed suit, along with Crypto.com, OKEx and Deribit, promising to publish proof of reserves sufficient to cover liabilities.
According to a recent analysis, FTX has only $900 million in liquid assets, while it has about $9 billion in liabilities. The balance sheet was taken from the day before FTX filed for bankruptcy while it still sought emergency funding.
The analysis revealed that the largest portion of these assets consisted of $470 million in Robinhood shares. However, these were owned by FTX founder Sam Bankman-Fried, a vehicle not listed in the bankruptcy filing. This description emphasizes the need for more transparency that the Binance CEO is now explaining.
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