Binance pledges to create crypto industry recovery fund, calls for regulation

© Reuters. FILE PHOTO: Cryptocurrency exchange Binance founder and CEO Changpeng Zhao speaks at a Binance fifth anniversary event in Paris, France, July 8, 2022. REUTERS/Tom Wilson/File Photo

NUSA DUA, INDONESIA (Reuters) - Binance chief executive Changpeng Zhao said the cryptocurrency exchange plans to launch a fund to help crypto projects facing a liquidity crisis as the collapse of rival FTX ricochets through the industry.

The recovery fund will help "reduce further cascading negative effects of FTX," Zhao said in a tweet on Monday, targeting projects that are "otherwise strong, but in a liquidity crisis".

Binance, which abandoned a mooted rescue of FTX, did not immediately respond to a request for comment on the size of the planned fund.

The crypto industry is reckoning with the collapse of rival exchange Sam Bankman-Fried's FTX, which filed for bankruptcy on Friday after users rushed to withdraw $6 billion in crypto tokens in just 72 hours.

Zhao said in a tweet on Nov. 6 that Binance would liquidate its holdings of FTX's native token, FTT, which raised investor concerns about FTX's balance sheet. Binance said on Nov. 8 it was considering a rescue deal for FTX, later abandoned after due diligence.

Earlier on Monday, Zhao called for new but stable and clear regulations for the industry, in light of recent developments and participants "cutting corners".

"We're in a new industry, we've seen in the past week, things go crazy in the industry," Zhao told a gathering of G20 leaders at a summit in Bali. "We do need some regulations, we do need to do this properly, we do need to do this in a stable way."

"I think the industry collectively has a role to protect consumers, to protect everybody. So it's not just regulators. Regulators have a role but it's not 100% their responsibility," Zhao said.

Over the weekend, Zhao had tweeted that Binance had stopped accepting deposits of FTX's FTT token on its platform, and urged other exchanges to do the same.

Zhao also said in a tweet on Monday that Binance "never shorted FTT".

"We still have a bag of (FTT) as we stopped selling FTT after SBF (Sam Bankman-Fried) called me. Very expensive call," he added.