As the dust settled around Binance CEO, Changpeng Zhao’s ambitious scheme to salvage the cryptocurrency market, the silence regarding the efficacy of said rescue plan has been resounding. Established in the throes of two major market downturns last year instigated by the Terra Network and the subsequent collapse of FTX, the Industry Recovery Initiative (IRI) tantalized onlookers with the promise of a billion-dollar fund aimed at securing a brighter future for struggling cryptocurrency startups.
Fast forward to now – the grand plan appears far less enticing. A mere shadow of the declared $1 billion has indeed been deployed, with under $15 million officially utilised, the majority of which ($985 million) is now comfortably situated within Binance’s corporate treasury, according to Bloomberg.
Weighing such revelations against the high hopes kindled by Zhao’s announcement last year whereby he vowed to collaborate with industry front runners to raise $1 billion, is a sombre exercise in retrospect. Respected firms like Jump Crypto and Animoca Brands were roped into the initiative, yet the intended financial influx has been largely stagnant, perhaps even retreating considering Binance’s recent conversion from BUSD to other cryptocurrencies, a change spurred by mounting regulatory pressures surrounding stablecoins.
Though it may be argued that rescue funds were indeed dispersed, benefiting 14 projects, the true names behind these ventures remain shrouded in mystery with only South Korean cryptocurrency exchange, Gopax, the sole divulged beneficiary. Trying to ascertain the full impact of the IRI, however, is marred by the sparse details.
A string of businesses initially threw their financial weight behind the IRI, contributing $100 million, yet the names of fewer than half of these generous benefactors grace the public record. Notable contributors include Jump Crypto and DWF Labs, pledging $25 million and $15 million, respectively – a fraction of which was put to use. Aptos, in contrast, fully utilized its $5 million pledge.
Binance, for its part, defends its fund underutilization, citing a lack of projects meeting their high standards for investment. Dan Hou, Binance’s head of Business Strategy and Operations, indicated that this lack of suitable investment opportunities is an industry-wide concern, not exclusive to Binance.
Equally important, though, are the repercussions the collapse of FTX had on venture capital funding in the cryptocurrency world. Data from blockchain intelligence firm Messari reveals that after hitting an all-time high of $17 billion in VC volume in 2021, the industry endured a 70% drop following FTX’s capitulation, only seeing marginal recovery with recent renewed institutional demand for spot Bitcoin ETF applications.
All in all, while ambitious lifelines like Binance’s IRI offer a glimmer of hope amid the tempestuous cryptocurrency seas, navigating these waters remains a perilous undertaking fraught with uncertainty.