With bitcoin tumbling to a two year low and desperate to find a bottom as every day a new - and extremely levered - shoe seems to drop as the fallout of the FTX bankruptcy claims more victims, many have been looking to Binance CEO Changpeng Zhao whose dump of FTT tokens crushed FTX, and who has emerged as the last "White Knight" in the crypto space after revealing last week that he is trying to put together a "rescue fund" for distressed crypto players.
Yet not even CZ is big or rich enough (his wealth is $14.5 billion, down from $81.3 billion in January) to singlehandedly become crypto's JPMorgan (and after so many media references to his criminal peer SBF as "the new JPMorgan", we doubt he even wants that designation). So who does CZ go to when he needs some extra cash? Why none other than the new beating heart of the crypto world, the place where so many Russian oligarchs...
... and crypto exiles now live ("Three Arrows Capital Moving Headquarters to Dubai From Singapore (https://www.bloomberg.com/news/articles/2022-04- 29/three-arrows-capital-moving-headquarters-to-dubai-from- singapore)") the United Arab Emirates whose two megacities, Dubai and Abu Dhabi, are emerging as the new centers of the post-crypto financial world (https://www.bloomberg.com/news/articles/2022-11- 15/hedge-fund-lmr-joins-millennium-exoduspoint-to-open-indubai) after also serving as core anchors of the old, petrodollar-based regime.
According to Bloomberg, Changpeng Zhao and several deputies met with investors in Abu Dhabi last week in an effort to raise cash for a crypto industry recovery fund. Zhao and his team held meetings with potential backers last week, including with entities affiliated with United Arab Emirates National Security Adviser Sheikh Tahnoon Bin Zayed, who oversees a large financial empire, said the people.
Details on the size of the fund and the projects to support are still not decided and it’s likely several weeks before the vehicle takes off, the people said.
“CZ’s meetings in Abu Dhabi were all focused on general global regulatory matters -- specifically how Middle Eastern regulators could lead the globe by exploring more aggressive proof of custody requirements for crypto exchanges,” a Binance spokesperson said.
Of course, there is much more to it than that: CZ has realized that in a world where both Chinese and western governments view crypto with distrust and are willing to crush it over the threat it poses to their doomed fiat systems, the rich gulf states - and here the UAE is the undisputed leader - will be the primary venue for future crypto development; now he just has to convince the local officials to allocate some of their oil wealth to crypto.
Zhao himself moved to Dubai last year and has built close ties with the UAE leadership. After FTX’s bankruptcy, Zhao tweeted that Binance would form a recovery fund “to help projects who are otherwise strong, but in a liquidity crisis.”
“There are still players with very strong financials and we should band together to try to help the projects in need, especially if it’s only financial need,” he said on the sidelines of Abu Dhabi Finance Week last Wednesday.
The Binance CEO, who also spoke at the Milken Institute’s Abu Dhabi conference, had said there was significant investor interest in the industry recovery fund and that he expects to finalize commitments in the coming weeks. His conversations in the region also included proposals to engage with Middle Eastern regulators and boost crypto adoption, the people said.
Bloomberg also reports that it has seen a Google form gauging investor interest is circulating with Binance’s name on it. “Thank you for reaching out to Binance regarding the industry recovery fund,” the form said. “We are committed to helping the crypto industry grow stronger in the current market conditions.”
Echoing our view on dramatic realignment in the crypto world, Bloomberg notes that "with the crypto world facing a crisis of confidence and many Silicon Valley firms burned by FTX’s implosion, the Middle East is becoming the go-to place to seek funds to halt the contagion."
Bankman-Fried himself spent time in the region in late October, trying to raise capital through meetings with Saudi Arabia’s sovereign wealth fund and Abu Dhabi’s Mubadala Investment Co., people familiar with the matter have said. Luckily, the talks failed to progress after FTX began a downward spiral that threw the exchange and its roughly 130 related entities into bankruptcy.
This time however, with the proper diligence, with sufficient capital, UAE has the potential to emerge as the true incubator of the post-fiat world.
