Changpeng Zhao – the man behind famed digital currency exchange Binance – has pledged roughly $2 billion to help save the digital currency arena.
Binance Is Looking to Save the Crypto Space
The crypto space has been failing as of late. Bitcoin, for example, has lost more than 70 percent of its overall value since it reached its new all-time high of about $68,000 per unit in November of 2021. In general, crypto has lost more than $2.2 trillion in valuation, and many companies have either had to file for bankruptcy or have disappeared from the world of trading and digital coins for good.
One of the biggest fiascos to emerge from all this hype and drama was FTX, the once-glorified crypto exchange that rose through the ranks to become one of the most prominent digital currency trading companies out there. Beginning in 2019, FTX was only three years old, but was labeled the golden child of the space.
This all changed in mid-November when after experiencing a liquidity crunch, the company was forced into bankruptcy rather suddenly, and its head executive (Sam Bankman-Fried) resigned from his post. For a while, it looked like Binance was going to be the company that saved it from the darkness, but this wasn’t meant to be.
The money provided by Binance will allegedly go towards supporting several different companies and projects within the industry’s borders. According to a blog post issued by the exchange:
The mandate of this new effort is to support the most promising and highest quality companies and projects built by the best technologists and entrepreneurs that, through no fault of their own, are facing significant, short-term, financial difficulties.
Initially, Binance was saying it would only pledge $1 billion, though this quickly changed. Changpeng Zhao wrote on Twitter:
Binance allocated another $1 billion [in Binance’s dollar-pegged stable coin] to the industry recovery initiative. It’s not the end of crypto. Far from it. It’s the beginning of a new chapter.
Not everyone is crazy about the idea. Cory Klippensten – a known crypto skeptic – said of the situation:
Obviously, a CZ-led recovery fund won’t be any better than an SBF-led effort to ‘save crypto.’ All it means is more money pumped into the casino to fuel greater fool gambling on 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 regulatory capture.
Not Everyone’s Convinced This Will Work
Liron Shapira – a crypto market commentator – also expressed doubt, saying:
It’s hard to imagine a scenario where this particular fund does much to stop the inevitable collapse. The idea of an insurance fund against a structural, cascading collapse never works. At best, it can keep delaying by another day which is the whole way the Ponzi works in the first place. The more money they burn through, the longer they can keep it going.
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