Binance Ltd., the largest cryptocurrency exchange by volume, has allocated $2 billion in funds to what it’s chief executive Changpeng “CZ” Zhao has called an “industry recovery fund” that will be used to buy distressed crypto assets and support crypto projects in crisis. 

Zhao first announced the recovery fund last week after the catastrophic collapse and bankruptcy of Sam Bankman-Fried’s crypto exchange FTX Trading Ltd. The downfall of FTX and its larger corporate structure, FTX Group, sent ripples throughout the larger crypto industry, which had already been suffering under depressed markets known as “crypto winter” triggered by previous events. 

“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,” Zhao said at the time. “More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.” 

The IRI was initially announced Thursday and allocated $1 billion, according to a press release, detailing its intent as “a new co-investment opportunity for organizations eager to support the future of Web3.” With the expectation that the allocation could be raised to $2 billion should the need arise. 

Initial investors alongside Binance listed big names in the crypto industry and crypto-focused venture capital firms including Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos and Brooker Group. The investors pledged $50 million to the fund, which would be allocated in BUSD, Binance’s US dollar pegged stablecoin. 

This morning, Zhao tweeted out that Binance would add another $1 billion to the fund raising the allocation to $2 billion. 

According to the announcement, the fund has two focuses: seeking out and purchasing undervalued and distressed assets from companies, and supporting otherwise strong projects that have been put into bad positions by the collapse of FTX. 

Crypto markets have already been suffering volatility and depressed values for the past twelve months, down significantly from all-time highs last November, such as bitcoin, which has fallen more than 75%. The crash TerraUSD/Luna, a USD-pegged stablecoin, in May deepened those issues. This caused a number of crypto lenders and market makers to fall end up with bad debts, liquidity issues, suspend withdrawals, and ultimately go bankrupt, including Three Arrows Capital, Holdnaut, Voyager Digitial and Celsius Network. 

Zhao also said that Binance’s U.S. arm would be placing bids on Voyager Digital, after a deal with FTX fell through to buy the distressed crypto broker, he confirmed during an interview on Bloomberg TV. 

In the wake of the liquidity crisis (and collapse) of FTX, Binance also pledged to publish a proof-of-reserves to show that it had the funds needed to cover all of its customers. The fruit of this labor was published today in a support document on the website using what is called a Merkle Tree that can be used to get deep data insight into Binance’s on-chain account data by anyone. 

Shortly after the initial pledge announcement, Binance did release detailed information about its reserves, but that was just ledger information and lacked the cryptographic certainty of on-chain data. Currently the only token that can be verified in this way is bitcoin, though the support page says that other coins and networks will be added in the coming weeks. 

Image: Pixabay

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