They plan to work together to establish an entirely new method that will, if successful, make it less difficult for bitcoin exchanges to give evidence that they have reserves. As a result, they are able to demonstrate that they have adequate liquidity.

After the issue involving FTX lending its customers' money to an affiliated trading firm called Alameda Research, CZ took the initiative to spearhead this project and invited other exchanges to follow in its footsteps.

CZ has committed to implementing Merkle trees on Binance in order to provide "complete transparency," and the company has urged all other cryptocurrency exchanges to do the same. The Proof of Reserves protocol, which has been around for a while, makes use of the Merkle Tree technique in order to efficiently aggregate a vast quantity of data into a single hash. This is accomplished by using the Merkle Tree.

However, this procedure can require some patience on your part. On November 10, Binance shared a snapshot of the addresses of both its hot wallets and its cold wallets. However, the world's largest exchange by trading volume is still searching for new ways to provide openness regarding its assets in order to compete with other exchanges around the world.

The specifics of the new endeavor have not been made public as yet. Nevertheless, the Binance exchange will serve as this trial run's platform.

CZ has some choice words for FTX.

Earlier today, CZ made the announcement that cryptocurrency exchange Binance is in the process of establishing a recovery fund for the sector. It will assist cryptocurrency projects that are "strong" but are experiencing a substantial lack of liquidity or are in the midst of a liquidity crisis.

He suggested that projects that felt they were deserving should get in touch with Binance Labs. CZ extended an invitation to participants in the cryptocurrency space who possessed additional financial resources to join and co-invest in the industry.

When asked if FTX is a strong project that is plagued with a liquidity crisis, Zhao responded that "liars or cheats are never considered as strong projects" in response to the question. The cryptocurrency community has been shaken as a result of the failure of the $32 billion cryptocurrency exchange FTX last week.

The assets of the exchange were sold off, and the company filed for bankruptcy in what seemed like the span of a single night. Sam Bankman-Fried, the founder and former CEO of FTX, was also impacted by the crash. He could face incarceration for mishandling client funds, which led to the crash.