Cryptocurrency exchange Binance said on Thursday it was pledging $1 billion (nearly Rs. 8,200 crore) to set up an industry recovery initiative (IRI) to invest in companies from the digital asset sector.
The move comes as the crypto market is reeling from the collapse of FTX, which is seeking Chapter 11 bankruptcy protection in the United States.
The unraveling of one of the largest crypto exchanges in the world has also fueled concerns about the industry’s continued ability to attract investment from venture capital and private equity giants.
Binance said it plans to increase the pledge amount to $2 billion (nearly Rs. 16,340 crore) in the near future depending on the need.
“We expect this initiative to last about six months and be flexible in terms of investment structure – token, fiat, stocks, convertibles, debt, lines of credit, etc,” the crypto exchange added in a statement.
Zhao said at a conference in Abu Dhabi last week that there was significant interest from industry players in a recovery fund his company plans to launch to help cryptocurrency projects facing liquidity problems following the collapse of rival FTX .
He said such a fund would help “mitigate FTX’s further cascading negative effects” without giving an exact figure for the fund.
Several crypto companies have braced themselves for the fallout from the FTX collapse, many counting their exposure to the beleaguered exchange in the millions.
It was reported a few days ago that Binance is also under global scrutiny following the sudden collapse of the FTX cryptocurrency exchange and its affiliates. Speaking to reporters, Republican Patrick McHenry, a senior House Republican, confirmed that Binance’s role in the collapse of FTX is under congressional scrutiny. However, Binance CEO Changpeng Zhao, aka CZ, has come out and vehemently denied participating in the collapse of the FTX, citing that his exchange is a victim of the situation.
Binance has argued time and time again that the cause of FTX’s collapse was “financial irregularities and possible fraud” in written submissions to a UK parliamentary committee. The UK counterparts in particular wanted to know what role Binance played in the collapse of FTX.
© Thomson Reuters 2022