Binance commits $1 billion to FTX relief fund

Binance commits $1 billion to FTX relief fund

On Friday morning, Binance CEO Changpeng Zhao said that the company committed $1 billion to its relief fund to help troubled businesses in the industry.

After FTX collapsed earlier this month, the company, once valued at $32 billion, filed for bankruptcy protection and left the industry frozen in its wake.

Earlier this month, Binance walked away from a purported deal to buy FTX.

The recovery fund, which now totals $2 billion, is targeted at distressed opportunities in the industry and already has 150 applications from companies seeking help, according to the company.

With no support or interest in bailouts from central banks, the industry recovery Initiative, or IRI, is the largest current relief source for the sector.

Each IRI participant acting on its own behalf will be reviewed on its merits, including appropriate legal assessments, a Binance spokeswoman told Yahoo Finance.

The initial aggregate commitment of $50 million is also being added by Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group. JumpCryptocurrencies, Animoca Brands and GSR have all disclosed exposure to FTX, but they don't offer a financial figure.

According to Conor Ryder, a research analyst with Kaiko, the fact that Binance is one of the last remaining lifelines is a welcome sign.

Ryder told Yahoo Finance that this latest effort carries some of the hallmarks of FTX, assuming a similar role over the summer.

According to Ryder, the fund is linked to a public wallet address, so there is no more opaque relationships between exchanges and their investments.

Earlier this week, the Wall Street Journal reported that Binance, along with Apollo, was approached by Genesis Trading, which has been seeking emergency funding since its lending business suspended withdrawals on November 16.

Some of the Genesis business lines could cause a conflict of interest, and Binance said it walked away from the offer. As of this morning, Binance told Yahoo Finance that position hasn't changed.

Ryder said it was reassuring to see Binance turn down the offer. FTX specialized in conflict of interest, in hindsight, so the reluctance to enter into an ambiguous relationship is encouraging. On Tuesday, FTX legal counsel called the exchange collapse earlier this month the most abrupt and difficult collapse in the history of corporate America. Court filings show that FTX owes its top 50 creditors $3.1 billion in total.

David Hollerith is a senior reporter at Yahoo Finance who covers cryptocurrencies and stock markets.