Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange in terms of trading volume, announced that they will create an industry recovery fund in a new post on his official Twitter account. Aiming to reduce the negative effects of the collapse of rival crypto exchange FTX, it was stated that the fund will help crypto projects and companies that are in a cash crisis and will be strong if they do not experience liquidity problems. Pointing out that the details of the fund will be shared soon, Zhao also underlined that projects and companies that think they are suitable for the fund can contact Binance Labs.
Binance CEO also invited other leading figures of the industry to invest in the fund in his post. Zhao’s explanation “Crypto is not going anywhere. We are still here. Let’s rebuild the industry” ended with his words.
What happened in the process that led FTX to bankruptcy?
Recently, the cryptocurrency market has been shaken by news that indicates that 22 million 999 thousand 999 FTX native tokens (FTT) have been transferred to Binance from an unknown wallet. Client funds were allegedly used by FTX to support sister company Alameda Research. Upon this; Binance CEO Changpeng Zhao has announced that Binance will liquidate all of its FTT holdings. Zhao, in his statement on the subject, “We learned from Terra LUNA; That’s why we’re leaving FTT” used the phrases. The Binance CEO’s reference to Terra LUNA, which wiped out more than $40 billion from the cryptocurrency market this year, created a domino effect in the market as users who invested in the FTX exchange began withdrawing their money.
FTX was unable to meet this demand and withdrawals were slow. Later, on-chain data indicated that the exchange had completely stopped withdrawals. Meanwhile, the lack of any official statement from FTX scared investors. But later, Binance CEO announced their intention to acquire FTX, in a move that shocked the crypto community. This development caused a sharp drop in the market and over $132 billion was wiped out of the cryptocurrency market within 12 hours. Within 48 hours of the announcement, Zhao pointed out in another Twitter post that they gave up on purchasing FTX.
After all these developments, FTX CEO Sam Bankman-Fried fell from the list of billionaires, losing a significant portion of his personal wealth in just a few days. Bahamas-based FTX, on the other hand, filed for bankruptcy in the US state of Delaware on November 11, together with FTX US and its sister company Alameda Research. The resignation of CEO Bankman-Fried also followed the filing for bankruptcy.