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Binance CEO calls for regulation, announces crypto ‘industry recovery fund’ after FTX collapse

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Changpeng “CZ” Zhao, chief executive of the cryptocurrency exchange Binance Ltd., said in a tweet early this morning that the company will launch what he terms an “industry recovery fund” to help save projects facing liquidity problems.

“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” said Zhao. “More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.”

Binance, the largest crypto exchange by volume, issued this news after FTX Trading Ltd., which was the third-largest exchange by volume, and its corporate structure FTX Group filed for bankruptcy in the U.S. on Friday.

During last week’s run-up to FTX’s bankruptcy, Binance attempted to rescue the smaller exchange during a liquidity crisis but backed out of the deal after determining that it could not help. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said at the time.

In a subsequent tweet, Zhao opened the offer for other industry investors to join him saying, “Crypto is not going away. We are still here. Let’s rebuild.”

There are no details yet about how the fund will operate or how projects that are facing “liquidity crisis” issues will be chosen.

Earlier today, Zhao called for new regulations on the crypto industry during a gathering of G20 leaders at a summit in Bali, reported The Guardian. Zhao pointed out that it could not be entirely the responsibility of watchdogs or regulators to prevent what happened with FTX and protect consumers, but that the crypto industry would have to also regulate itself.

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

However, he also added that he believed that further regulation is needed.

“No one can protect [from] a bad player, to be very frank, if a guy is very good at lying, and very good at just pretending to be what he’s not,” Zhao added. “[If] somebody wants to violate the law, the law is not going to prevent that. The law can help to reduce that.”

Zhao’s comments come at a time of greatly increased scrutiny by watchdogs and regulatory bodies worldwide into the crypto industry. Especially in the wake of the previous issues that have rocked crypto players such as the collapse of the Terra-LUNA stablecoin ecosystem in May, which wiped almost $60 billion off the market and caused the bankruptcy of multiple crypto hedge funds and lenders.

The Financial Stability Oversight Council, a U.S. regulatory watchdog, released a report in October calling for increased regulation of crypto assets. And Treasury Secretary Janet Yellen reportedly said that the implosion of FTX displayed a “weakness in the entire sector,” also using it to call for stricter regulations of the industry.

Image: Pixabay

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