Binance CEO Changpeng ‘CZ’ Zhao revealed on Nov. 14 that the exchange would launch an industry recovery fund to help strong projects 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
CZ made the statement in light of the recent bear market liquidity crunch that has hit several crypto projects, forcing some of them out of business.
According to CZ, the fund would be open to other industry players that want to invest. He added that more information would be provided about the initiative soon.
CZ asked projects that believe they qualify for the fund to reach out to Binance Labs.
In June, CZ said Binance was willing to help industry players survive and thrive even if the company did not gain anything from such help.
Binance Pool had also launched a $500 million lending facility to support the crypto mining industry.
Crypto community praises CZ initiative
The crypto community has welcomed CZ’s initiative, with many hailing the idea as a welcome development.
Hey CZ, great idea. We’ve actually been doing this already for good teams in the ecosystem that were unfairly affected. Happy to join forces on the recovery fund.
— Quantstamp (@Quantstamp) November 14, 2022
That’s extremely nice, as we know that many good projects were affected by FTX. will be good if you could list all the approved ones too.
— Sydney TheCMO.eth (@SydneyIfergan) November 14, 2022
Tron (TRX)founder Justin Sun said his two exchanges, Huobi Global and Poloniex, would participate in the initiative. Sun said:
“(We would) participate in this industry recovery fund and help good builders and developers to recover from the crisis!”
Another major stakeholder that supported the fund was Simon Dixon — founder of the web3 investment firm Bnk to the Future. Dixon said he would like to join the fund and added that this should be an industry-wide effort.
Please DON’T do this.
If the business is struggling with Liquidity there is a reason.
Normally Mismanagement and incorrect hires.
Giving money to help those that are struggling just prolongs there ability to lessen their harm and place more direct harm on us the customers.
— NerdzRin (@NerdzRin) November 14, 2022
Meanwhile, some expressed reservations about the idea, asking how Binance would determine “strong projects.” Some also pointed out that the fund shouldn’t bail out projects facing a liquidity crisis because it shows failure on their part.