Terra Luna 2.0? Binance CEO Reveals Huge $2 Billion Fund After FTX Meltdown Crashes Bitcoin And Crypto Prices
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The Bitcoin price has fallen 20% since this time last month, dragging down the broader crypto market and taking the total value wiped from the combined crypto market to around $2.2 trillion (although Tesla billionaire Elon Musk has issued a surprising 2023 price prediction).
Now Binance CEO Changpeng “CZ” Zhao has pledged $2 billion to a crypto rescue fund — just months after Luna Foundation Guard burned through nearly $3 billion trying to shore up its terra stablecoin ecosystem and FTX’s disgraced founder Sam Bankman – Peace (SBF). ) reportedly dipped into FTX user funds to support his trading company, Alameda Research, and the broader market.
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Binance’s so-called Industry Recovery Initiative will support cryptocurrency companies and “projects” struggling during the bitter crypto winter that risks turning into an ice age thanks to the sudden collapse of FTX.
“The mandate of this new effort is to support the most promising and high-quality companies and projects built by the best technologists and entrepreneurs who, through no fault of their own, are facing significant short-term financial difficulties,” a Binance blog post read, adding the fund will accept donations from other crypto companies and has already received interest from a handful of high-profile investors.
After initially pledging $1 billion to the fund, saying that Binance would “increase this amount to $2 billion in the near future if the need arises,” CZ upped the commitment to $2 billion just hours later.
“Binance allocated an additional $1 billion [in Binance’s dollar-pegged stablecoin] to the Industry Recovery Initiative,” CZ posted to Twitter. “It’s not the end of crypto. Far from it. It’s the beginning of a new chapter.”
The industry recovery initiative is an attempt to inspire or restore confidence in the crypto market in the same way as a central bank following the implosion of FTX and SBF, which earlier this year was branded as crypto’s “lender of last resort” before its devastating fall.
However, the fund has not been able to immediately allay fears that the contagion of FTX will not spread to other companies and will continue to drag on the price of bitcoin and other cryptocurrencies.
“It’s hard to imagine a scenario where this particular fund does much to stop the inevitable collapse,” crypto market commentator Liron Shapira said via Twitter DM.
“The idea of an insurance fund against a structural, sweeping collapse never works. At best, it can continue to delay for another day, which is the whole way Ponzi works in the first place – the more money they burn through, the longer they can keep it goes.”
The fund has also raised questions about centralization in the crypto market, with Binance both the world’s largest exchange and the industry’s de facto lender of last resort.
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“It’s clear that a CZ-led recovery fund will be no better than an SBF-led effort to ‘save crypto,'” Cory Klippsten, an outspoken critic of non-bitcoin cryptocurrencies and CEO of bitcoin buying app Swan Bitcoin , said via Telegram.
“All it means is that more money is pumped into the casino to drive more gambling with inherently worthless non-bitcoin crypto tokens. If CZ succeeds in further centralizing the non-bitcoin crypto industry, it will only make it more prone to collapse or regulation. prisoner.”