The chief of crypto exchange Binance said he may snap up $1bn worth of distressed assets in the sector as he warned of spreading contagion in the wake of FTX’s collapse.
Changpeng Zhao, who at one stage was poised to buy FTX as it first faltered amidst a liquidity crisis, outlined his plans for an industry recovery fund that could help rescue struggling firms from collapse.
Zhao tweeted last week that Binance would set up a fund for the industry to help save distressed firms from collapse, as the industry rushed to soothe fears of a contagion in the wake of FTX’s failure.
“We are going with a loose approach where different industry players will contribute as they wish,” he told Bloomberg TV in an interview, adding that the firm will publish a blog post with more detail about the fund.
‘CZ’, as he is know in the industry, warned opportunities would present themselves as the shockwaves of FTX spread, saying there would “probably” be more collapses as contagion took hold of the industry.
However, the Binance founder said the sector was safe in the longer term and as “each time there are cascading effects, the effects become smaller.”
Zhao added that the firm was surveying the assets of Bankman-Fried’s collapsed crypto empire to see whether there were assets worth snapping up.
“They invested in a number of different projects, some of them are OK, some of them are bad but I think there are certain assets that are salvageable,” Zhao said.
The Binance chief accelerated the downfall of his rival exchange earlier this month after he tweeted that Binance would be offloading its stake of FTX’s token FTT.
The revelation sparked a run on the token and caused investors to pull their assets from FTX, sparking the liquidity crisis that led to its downfall.
Firms and players in the industry have been rushing to restore faith and shore themselves up in the wake of its collapse.
Binance has been among a host of firms to offer customers a look at its books to prove their assets are backed and able to be widrawn. Crypto exchange OKX yesterday offered a ‘proof of reserves’ to customer to prove it held their assets 1:1.
OKX, the second largest exchange by volume, has also announced a market recovery fund worth £84m which it said it would use to shore up firms against future crises.