Changpeng ‘CZ’ Zhao, head of the world’s largest cryptocurrency exchange Binance, is planning an industry ‘recovery fund’ following the stunning collapse of FTX, formerly the world’s second-largest cryptocurrency exchange.
Speaking at the Business 20 Summit in Bali, Indonesia on Monday, CZ conceded that no one can truly be protected from a “bad player”, especially “if a guy is very good at lying, and very good at just pretending to be what he’s not”.
It doesn’t take a genius to read between the lines and realise that that was a broadside against former FTX head and CZ’s “sparring partner” Sam Bankman-Fried (SBF).
However, “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,” CZ announced.
CZ was on the brink of bailing out FTX as it was descending into bankruptcy earlier this month, but after taking a quick look at the company’s doomed finances, he wrote it off as a lost cause and quickly reneged.
Alongside the recovery fund, CZ today disclosed plans for an “industry association” comprising big players in the crypto industry.
Speaking in a Twitter Spaces Q&A, he discussed how the association will act as a central point of communication for policy discussions and regulatory negotiations, as well as an advocacy platform for proof-of-reserve disclosure protocols.
The size of the fund and more specific details of the industry association are pending.
SBF once had similar ambitions. He offered to bail out dozens of struggling crypto and blockchain companies this year, while his regulation advocacy actions and appearances befoe Congress made him the public face of crypto.
His closeness to the regulators and Democratic politicians caused a great deal of controversy throughout the crypto space, with many commentators – including CZ himself – accusing SBF of selling out the industry.
It speaks to how rapidly sentiment changed in the past week that CZ is receiving little flack for pursuing similar goals.
Such is the impact FTX’s demise has had on the crypto sector in such a short space of time.
Hopefully CZ’s altruistic streak doesn’t turn out to be built on lies and shitcoins too. Either way, it’s got to hurt SBF to see his nemesis step in as a crypto saviour (at least in some circles) after spending so long trying to position himself as such.
SBF’s bittersweet calamity
On the bright side, there’s a chance that a bill touted by SBF could actually be passed.
The bipartisan Digital Commodities Consumer Protection Act would grant the Commodity Futures Trading Commission greater power over cryptocurrency markets and exchanges.
Following FTX disaster, Senate Agriculture Committee chair Debbie Stabenow and Republican counterpart John Boozman committed to moving the bill forward.
“The recent collapse of a major cryptocurrency exchange reinforces the urgent need for greater federal oversight of this industry,” said Stabenow, adding: “Consumers continue to be harmed by the lack of transparency and accountability in this market. It is time for Congress to act.”
Ironically, SBF’s reckoning could be the one thing to make his pro-regulation vision a reality.