Since the collapse of the FTX cryptocurrency exchange, Binance CEO Changpeng Zhao has actively sought to establish a recovery fund to help troubled firms with strong fundamentals. Today, Binance announced to double its recovery fund plan from $1 billion to $2 billion.
In a recent interview, Zhao said that the crypto recovery fund will have co-investors to support crypto projects facing liquidity pressure. He further said, "We will use a loose approach where various industry players will contribute according to their wishes,"
Some popular names such as Polygon Ventures, Jump Crypto, Animoca Brands, Aptos Labs, Kronos, GSR and Brooker Group have already pledged a combined contribution of $50 million. The head of Binance said that he is looking to limit the damage to the Crypto sector from the collapse of the FTX exchange.
Binance has yet to confirm how much it will contribute. But sources say that Binance's prospective contribution far exceeds commitments made by other firms. King River Digital Asset Fund portfolio manager David Adams told Bloomberg:
"The market will be watching the public wallet address fund closely to see if it attracts large amounts of non-Binance capital, as this will show how broad the industry's support for stabilization is".
Although the head of Binance took this opportunity to build his credibility in the crypto space, the fact that his tweet has caused a change of trend in FTX, where it has caused some questions. Several lawmakers from the UK Parliament have also asked Binance to explain the situation surrounding Zhao's tweet on November 6.
Lawmakers are interested to know whether the company understands the impact of the tweet or not. Hayden Hughes, chief executive of social trading platform Alpha Impact said:
“There was too much uncertainty in the market for the recovery fund itself which ended up being the catalyst that changed everything. We still don't know the extent of the contagion. But I think we are in a downtrend and I don't expect the market to go down much from here.”
On the other hand, regulatory tensions with Binance continue to exist as the exchange has licenses in several jurisdictions without a formal foundation anywhere.
