A cryptocurrency exchange called Binance declared on Thursday that it would invest $1 billion in establishing an industry recovery initiative (IRI) to finance companies in the digital assets sector.
The decision is being made as the cryptocurrency market is on edge and FTX, which is seeking Chapter 11 bankruptcy protection in the United States, falls.
The failure of one of the biggest cryptocurrency exchanges in the world has also raised questions about the industry’s capacity to continue luring investments from significant venture capital and private equity firms.
Binance stated that it may soon expand its committed amount to $2 billion depending on demand. The cryptocurrency exchange went on to say, “We anticipate this endeavour to last for about six months and will be flexible in terms of the investment structure, including token, fiat, equity, convertible instruments, debt, and credit lines.
Zhao asserted last week at a conference in Abu Dhabi that there was considerable interest from industry executives in a recovery fund his company planned to launch to aid cryptocurrency ventures experiencing a liquidity shortage. This was in response to the failure of rival FTX.
He said that the fund would “avoid additional cascading harmful impacts of FTX” without specifying the precise cost.
As they get ready for the fallout from the FTX collapse, many cryptocurrency companies have been calculating their exposure to the problematic exchange in the millions.