Binance will form a fund to rebuild the crypto industry after FTX’s collapse
According to Changpeng Zhao, assistance will be given to “projects who are otherwise strong, but in a liquidity crisis”
14.11.2022 - 08:10
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What’s new? On November 14, Binance exchange CEO Changpeng Zhao announced the creation of a crypto industry recovery fund “to help projects who are otherwise strong, but in a liquidity crisis.” He urged eligible companies to contact Binance Labs. According to Zhao, the initiative will “reduce further cascading negative effects of FTX” on the industry. He also invited other major companies to participate in the creation of the fund. Details on the initiative will appear soon.
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. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify. 1/2 — CZ 🔶 Binance (@cz_binance) November 14, 2022
What happened before? Zhao said that FTX’s collapse undermined the credibility of the entire industry and drew increased attention from regulators, which will make it harder for crypto companies to operate in the future. He also called on other exchanges to provide proof-of-reserves reports. Binance itself reported $69 billion in reserves two days later.
On November 11, the Crypto.com crypto exchange also published data on reserves of $2,9 billion. On November 13, it became known that the exchange sent more than 280 000 ETH from a cold wallet to the Gate trading platform after the report was published. Crypto․com CEO Kris Marszalek stated that the transaction was in error. He explained that the exchange worked with the Gate team and the funds were subsequently returned to Crypto․com cold storage.
It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring. — Kris | Crypto.com (@kris) November 13, 2022
The next day, crypto exchange Huobi also released a report on reserves, immediately after which it transferred 10 000 ETH from one of its wallets to Binance and OKX platforms. This was pointed out by analyst Colin Wu.
After Huobi released the asset snapshot of the asset reserve, 10,000 ETH was transferred from 0xca...c3fc (Huobi 34) to Binance and OKX deposit wallets. The Huobi 34, which had 14,858 ETH at the time of the snapshot, currently has only 4,044 ETH left. https://t.co/wrphZxadBM pic.twitter.com/B2lRXMF8su — Wu Blockchain (@WuBlockchain) November 13, 2022
Zhao later called it “a clear sign of problems” that exchanges move large volumes of cryptocurrencies on the eve of reports or immediately after their wallets are demonstrated, and called to “stay away [from such companies].”
If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU. 🙏 — CZ 🔶 Binance (@cz_binance) November 13, 2022
Earlier, economist Nouriel Roubini and Peter Schiff, head of the brokerage firm Euro Pacific Capital, wondered who would help Binance itself if the exchange faced a crisis, implying that such companies may not exist. These statements they made amid the news of a possible takeover deal of FTX by Binance, which was subsequently terminated.
Zhao said on November 11 that a deal to buy FTX did not make sense for several reasons, including potential problems with regulators. Later that day, FTX Group, which has about 130 companies, filed for bankruptcy in the United States.
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