Binance CEO Changpeng Zhao announced that his company would be launching a recovery fund to stabilize the cryptocurrency industry.
The main purpose for the fund would be “to reduce further cascading negative effects of FTX,” Zhao said. The exchange’s significant integration in the industry meant its collapse would spread widely, the Binance CEO said last week.
He added that the fund would go to support projects impaired by these effects, but were otherwise financially sound.
Huobi and Poloniex Join Initiative
The Binance CEO also encouraged others within the industry dedicated to supporting its survival and recovery to contribute. This immediately drew interest from prominent crypto industry participants, such as Justin Sun and Simon Dixon.
Tron founder Sun, who recently became an advisor for Huobi, said these exchanges along with Poloniex would support Zhao’s initiative. Meanwhile, Dixon also expressed support, but warned that it should not become overly centralized.
Zhao Emphasizes Need for Transparency
Zhao told business leaders in Bali that the cryptocurrency industry had a responsibility “to protect consumers.” The Binance CEO called for greater regulation of the sector, but implied that this could not guard against “bad players.”
Consequently, Zhao said the industry would have to emphasize transparency, leading by example with his exchange Binance revealing its reserves. Other exchanges followed suit, with Crypto.com, OKX and Deribit promising to publish proof of sufficient reserves to cover liabilities.
According to a recent analysis, FTX held a mere $900 million in liquid assets against roughly $9 billion in liabilities. The balance sheet was taken from the day before FTX filed for bankruptcy, while it still sought emergency funding.
The analysis revealed that the largest portion of these assets consisted of $470 million in Robinhood shares. However, these were held by a vehicle owned by FTX founder Sam Bankman-Fried not listed in the bankruptcy filing. This detail emphasizes the need for greater transparency that the Binance CEO is now expounding.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.