An announcement by Binance CEO Changpeng Zhao has sparked an immediate surge in the price of Bitcoin and cryptocurrency markets in general.
Zhao says he is forming an “industry recovery fund” to support companies and projects struggling with liquidity in the wake of the FTX collapse.
“To reduce further negative cascading effects of FTX, Binance is forming an industry recovery fund, to help otherwise strong projects, but in a liquidity crisis. More details will be forthcoming soon. You could contact Binance Labs if you think you are eligible.
Other industry players with cash who want to co-invest are also welcome. Crypto is not going away. We’re still here. Let’s rebuild.”
Bitcoin has rallied from a 24-hour low of $15,906 to a high of $16,580.
Ethereum has bounced from a 24-hour low of $1,180 to a high of $1,233.
The market move caps a chaotic weekend that began with claims that FTX had been hacked as user account balances fell to zero and millions of dollars in cryptocurrencies began to flow out of the exchange.
A few hours before Zhao’s new announcement, FTX founder Sam Bankman-Fried posted a bizarre and incoherent message on Twitter.
Bankman-Fried has not said anything material since announcing the bankruptcy of FTX, FTX.US, and Alameda Research on Friday.
Regulation will help, but it won’t fix everything
Zhao said he wants to form an organization that can “establish best practices” in the sector, known for its lack of regulation.
“Regulation must adapt to this sector,” Zhao said. “Regulation won’t fix all this, it will reduce it. It is important, but we have to have the right expectations,” he added.
Zhao reflected on how there are elements of traditional finance that could help the cryptocurrency market become more regulated and reliable, but practices would need to adapt to be appropriate.
The “transparency” and “audit” aspects of traditional finance could benefit the cryptocurrency sector, but there are “subtle but very important” differences that would need to be introduced, according to the CEO.
“Too many regulators have a more traditional mindset, they need to get a crypto mindset,” he said
The comments echo those made by Ripple CEO Brad Garlinghouse, who said the idea that crypto is “unregulated is overblown,” but that “transparency breeds trust.”
“Crypto has never been all sunshine and roses and, as an industry, it needs to mature,” Garlinghouse said on CNBC’s “Squawk Box Europe” program on Wednesday.
Economist Nouriel Roubini took a different line in his interview at Abu Dhabi Finance Week and described cryptocurrencies and some of their key players as a “totally corrupt ecosystem.”