• Its bailout plan comes as former billionaire Sam Bankman-FTX Fried’s is going through a bankruptcy process.
• This has put a growing number of crypto companies that did business with the trading platform and its related businesses on the verge of going out of business.
• Since then, there has been a bank run on FTX and it has fallen into a liquidity crisis.

Binance, which is run by billionaire Changpeng Zhao and is the world’s largest cryptocurrency exchange, will give up to $2 billion to help crypto firms that are having trouble making ends meet because of the bankruptcy of a rival exchange, FTX.

In a statement released late Thursday, Binance said it would set up a $1 billion recovery fund with plans to increase it to $2 billion “if the need arises” in the near future. Seven investment firms, including Animoca Brands, based in Hong Kong, and Jump Crypto, the digital assets branch of Chicago-based trading shop Jump Trading, have committed a total of about $50 million to the exchange operator as a first step.

Its bailout plan comes as former billionaire Sam Bankman-FTX Fried’s is going through a bankruptcy process. This has put a growing number of crypto companies that did business with the trading platform and its related businesses on the verge of going out of business. Genesis Global Capital, the crypto lending arm of U.S. billionaire Barry Silbert’s Digital Currency Group, and Blockfi, the crypto lending arm of a company that got credit from FTX, are two of the companies.

Binance said it wants to help companies and projects that are having big short-term money problems “through no fault of their own.” The initiative, which will last about six months, could use instruments like crypto tokens, fiat currencies, equity, debt, or credit lines. So far, 150 companies have asked for help and sent in applications.

Bankman-crypto Fried’s empire fell apart after Zhao, the cofounder and CEO of Binance, announced in a tweet that FTX’s crypto tokens were going to be sold. The tweet brought attention to a Coindesk report that made people worry about FTX’s finances. Since then, there has been a bank run on FTX and it has fallen into a liquidity crisis. This is because Binance backed out of its plan to save the cryptocurrency exchange, citing “due diligence,” “the latest news reports about mishandled customer funds, and alleged U.S. agency investigations.”

Bloomberg says that last week, the U.K.’s Parliamentary Treasury Committee asked Binance to explain what happened with Zhao’s tweets and if the company knew what the possible consequences were. The lawmakers, on the other hand, are said to have said that the evidence Binance gave them was disappointing and not good enough.

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