In a blogpost, Binance said that it is allocating as much as $1 billion U.S. to the recovery fund and added that it may eventually increase that amount to $2 billion U.S. should the need arise for more money to prop up struggling crypto firms.
Binance added that it has received $50 million U.S. in funding commitments for the recovery fund from crypto investment firms Jump Crypto, Polygon Ventures, and Animoca Brands.
Binance CEO Changpeng Zhao, also known as CZ, said in the blog post “We do this transparently.”
The fund is an attempt by Binance to keep the cryptocurrency industry solvent after controversial entrepreneur Sam Bankman-Fried’s %FTXExchange filed for bankruptcy on November 11, citing $8 billion U.S. in losses.
Since FTX’s sudden and unexpected collapse, investors have worried about a possible contagion spreading across the global cryptocurrency sector, leading to more failures and lost investment dollars.
Binance said its recovery fund “is not an investment fund” and is intended to support companies and projects that, “through no fault of their own are facing significant short-term financial difficulties.”
Binance said it anticipates the recovery fund will last about six months before being wound down. It is accepting applications from investors to contribute additional funds.
Binance said it is accepting contributions to the recovery fund in the form of digital tokens, cash, and debt.
Around 150 companies have already applied for financial support from the recovery fund, said CZ in the blog post.
Cryptocurrency prices continue to slump in the wake of the FTX failure. The price of %Bitcoin ($BTC), the largest cryptocurrency by market capitalization, has fallen 75% from an all-time high of $68,000 U.S. a year ago to now trade at $16,400 U.S.