Binance released details of the fund yesterday after CEO Changpeng Zhao previously signaled its plan to launch the fund. Binance has poured the first $1 billion into the fund. Meanwhile, Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group have agreed on an initial commitment of approximately $50 million. It was also revealed that TRON (TRX) also participated in this fund. But the Binance CEO points to the possibility of the fund rising to $2 billion. Here are the details…
Binance creates $1 billion bailout fund
cryptocoin.com As we reported, Binance announced that it is in the process of creating a $1 billion recovery fund. The fund has issues caused by Sam Bankman-Fried, whose crypto exchange FTX is at its center. With the fund, he hopes that the collapse of his empire of crypto companies can lessen some of the damage done to the crypto industry. A wide variety of businesses in the industry, from investment companies to early-stage DeFi projects, have been impacted by the collapse of FTX.
By design, contributions to the industry recovery fund can be tracked using Blockchain analysis. Binance said in a blog post that its investment could be increased to $2 billion “in the near future if needed.” The fund will target projects that are considered economically viable and innovative but are experiencing liquidity problems due to the FTX crisis.
Investment from different industry players
In an interview on Thursday, November 24, Zhao said that the crypto recovery fund will have co-investors to support liquidity-strapped crypto projects. “We are going with a loose approach where different industry players will contribute as they please,” he said. Some of the popular names like Polygon Ventures, Jump Crypto, Animoca Brands, Aptos Labs, Kronos, GSR, TRON and Brooker Group have already committed $50 million. As it is known, Polygon is associated with the MATIC altcoin, while Aptos is associated with APT. On the other hand, Binance’s BUSD and BNB are also included in the fund. Anomica Brands is the developer of The Sandbox’s SAND token. Finally, TRON is the platform behind TRX.
Binance CEO says he wants to limit the damage to the crypto industry from the explosion of FTX. According to sources, Binance’s possible contribution far outweighs the commitments of other firms. King River Digital Assets Fund portfolio manager David Adams said:
The market will be closely watching the fund’s public wallet address to see if it has attracted significant non-Binance capital, as this will show how broad-based industry support is for stability.
Binance’s CEO’s tweets have caught the attention of regulators
While the Binance CEO used this opportunity to boost his credibility in the crypto space, the fact that his tweets triggered a turn of events at FTX sparked a few questions. Some MPs from the UK Parliament have also asked Binance to explain the circumstances surrounding Zhao’s tweets on November 6. Lawmakers want to know if the company understands the impact of these tweets. Hayden Hughes, CEO of social trading platform Alpha Impact, said:
There is too much uncertainty in the market for the bailout fund to be the catalyst that turns everything around. We still don’t know the extent of the contagion. But I think we are close to the bottom or at the bottom and I don’t expect the markets to go down much from here.
