Binance has announced the creation of what it refers to as an “industry recovery fund” in response to the meltdown of the cryptocurrency exchange FTX and its sister firm, Alameda Research. This fund is intended to save crypto companies that are having liquidity problems.
According to CZ, the CEO of Binance: “To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund to help projects [that] are otherwise strong but in a liquidity crisis.”
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
Announcing that further information about the effort would be released soon, he urged projects that believed they “qualified” to get in touch with Binance Labs.
Other “industry participants with cash,” according to the CEO of Binance, are welcome to co-invest in the fund. CZ noted: “Crypto is not going away. We are still here. Let’s rebuild.”
Simon Dixon, CEO of BankToTheFuture, and Justin Sun, founder of Tron, have both already indicated their intention to back the proposal. Dixon noted, “Let’s make this an industry effort.”
Critics Communicate Worry on the Proposed Binance Relief Fund
While the proposed industry recovery fund’s purpose is not yet known, several critics have expressed worry about how to distinguish between someone who is genuinely experiencing liquidity issues and someone who is committing fraud.
Sharing his thoughts on the topic, Sean Penso, Managing Partner at Cortelyou Capital, explained: “You can’t backstop billions in offside liabilities without first fixing Ponzi business models. This industry fund sounds like fluff or a bad decision.”
Never thought I’d write this…but I actually agree with Rich on this one.
You can’t backstop billions in offside liabilities without first fixing ponzi business models.
This industry fund sounds like fluff or a bad decision
— Sean Penso (@SeanAndrewP) November 14, 2022
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