“I actually reflect on the FTX situation and I kind of blame myself for tweeting that too late. As an industry, we let FTX get too big before we started questioning some of those things.“
That was Binance founder Changpeng Zhao speaking to Bloomberg TV on Thursday about the latest developments surrounding failed crypto exchange FTX and how much the industry needs to question its peers to avoid a similar situation.
He told Bloomberg, after recently deleting a tweet questioning the amount of Bitcoin on Coinbase, that he is taking the approach of asking questions “a lot earlier.”
“It does not mean any attacks on any of our industry peers. We just want to build more transparency and more scrutiny into the industry,” he said.
When asked about the state of the industry following FTX’s collapse and the fallout from other firms as a result, Zhao said that he expects to see “a little bit of contagion.”
“Whenever one big player goes down, especially a trading platform, there are many other people or institutions with money on the platform,” he added.
In response to news reports swirling around the risk of crypto trading firm Genesis filing for bankruptcy, Zhao added that there may be one or two more similar cases to come.
“Each time there’s cascading effects, the effects become smaller so I think overall the industry is fine but there will be some probably,” he added.
Genesis meltdown: Why investors are worried about bigger problems for crypto
Zhao also addressed reports that his company plans a crypto recovery fund that emerged on Wednesday. He said the fund will likely be loosely structured, transparent and launched imminently and that he will be posting a blog post later on Thursday with more information.
Responding to reports that Binance will launch a crypto recovery fund, Zhao said the fund will likely be loosely structured, transparent and launched imminently and he will be posting a blog post later on Thursday with more information.
“Whoever contributes can move funds to a blockchain crypto address that people can look at. So it’s not just some behind the scenes fund,” he explained.
He also told Bloomberg that Binance is setting aside roughly $1 billion to look into buying distressed crypto assets, and will engage in bidding for FTX assets through liquidation court when the time comes round.
“We originally want to engage directly with FTX, but then we found out based on Bloomberg reports there are potential investigations going on, so we said hands off,” Zhao said.
“They invest in a number of different projects, some of them are okay, some of them are bad but I think there are certain assets that may be salvageable and that may be of interest. We’ll look through that when they become available.”