Binance, a one-time suitor and major crypto exchange, is stepping in to help clean up FTX’s mess.
- Binance is one of the largest cryptocurrency exchanges in the world.
- Speaking on Saturday at the B20 Summit in Bali, Binance CEO Changpeng Zhao announced that his company is stepping in to help bolster crypto investors affected in the aftermath of the fall of the FTX crypto exchange.
- Binance will be launching a crypto recovery fund to help major investors harmed by FTX’s losses and liquidity crunch, as the exchange lacks the capital to pay out many withdrawal requests, Bloomberg reports.
- Major cryptocurrencies have seen a rally today as the market responds to the news. Bitcoin rose 7.1%, Ethereum rose 7.7%, and Solana rose 16.3%.
- FTX founder Sam Bankman-Fried approached Zhao last Monday offering to sell the company to fix a liquidity crisis. Binance backed out of the nonbinding deal on Wednesday as details emerged about the company’s state.
Why it’s News
The crypto economy has been in active freefall for a week as a result of the fall of FTX, one of the largest names in crypto. Zhao’s move helps bolster the market from further fears, as market fears tumbled and devalued the majority of major currencies. Binance’s move has stabilized the market going into this week.
“Zhao said the fund is intended to prop up investor confidence following the dramatic collapse of Sam Bankman-Fried’s FTX crypto exchange, which wiped out about $200 billion in crypto market value. Zhao has not announced any details,” says Bloomberg.
Bankman-Fried is still being investigated by multiple federal agencies including the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission—and it is likely that he will be extradited from the Bahamas.
As we previously reported, he has lost his entire $16 billion fortune in less than a week, but the cost of his failure is going to hurt more than just the exchange’s founders.
“There were growing signs that customers of the bankrupt digital-asset exchange have little chance of recovering much of their deposits. FTX Trading International held just $900 million in liquid assets on Thursday—the day before it filed for Chapter 11 bankruptcy—against $9 billion of liabilities,” says Bloomberg.