Binance to convert cash reserves into crypto

Binance had set aside the funds for assisting troubled but viable crypto businesses which were hit by FTX’s collapse in November

Binance, the world’s biggest crypto exchange in terms of volume, announced it will turn a fund holding almost $1b in reserves into several digital currencies, pushing those currencies higher but failing to calm nerves regarding expanding U.S. investigation of its operations.

Given the changes in stable coins and banks, #Binance will convert the rest of the $1b Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH, Binance founder and Chief Executive Officer Changpeng Zhao said.

Binance had set aside the funds for assisting troubled but viable crypto businesses which were hit by FTX’s collapse in November. Though, Binance – whose decision to pull the plug on FTX sparked that collapse – has not closed any important support deals since the turn of the year.

The move comes following a wild week for crypto currencies, which were hit by the failure of three of the largest institutions that facilitated money flows between the parallel worlds of crypto and fiat currency – Silicon Valley Bank, Signature Bank and Silvergate Capital.

Their collapse has sparked widespread alarm in crypto circles, chipping away their ability to trade freely and resulting in panicked selling of tokens considered to be at risk. USDC, the world’s second largest stablecoin by outstanding volume, dropped to 88 cents over the weekend before recouping, after it became widely known that $3.3b of the reserves backing it were on deposit at Silicon Valley Bank. The alarm abated after the Federal Reserve suggested on Sunday that it would honour all deposits – not just federally insured ones – after taking the bank over on Friday.

The prices of Bitcoin, Ethereum and BNB, a Binance native token, all increased in reaction as Binance’s news coincided with a general sense of relief that a disaster had been avoided.

Though, while Zhao styled the move as a vote of confidence in crypto and an exercise in ‘transparency’, others were swift to correlate it with a move by Do Kwon, the founder of the ill-fated Terra/Luna stablecoin network to transfer its cash reserves into Bitcoin shortly before it collapsed last May.