The eminent crypto exchange Binance has been largely reticent on the question of which projects have received funding from their $1B cryptocurrency recovery fund. Established in response to the fallout from the FTX collapse, the Industry Recovery Initiative (IRI) was intended to provide financial support to the wider cryptocurrency industry.
IRI, a Binance-initiated co-investment project, gathered an additional $100 million from 18 organizations by February 2023. Amongst the contributors were renown firms like Animoca Brands, Polygon Ventures, Aptos Labs and many others. Nevertheless, despite an initial investment of $1 billion in BUSD stablecoins, to date, only an estimated $30 million have been invested since the inception of IRI.
Moreover, the sole publicly disclosed expenditure from Binance’s initial investment into the IRI is the acquisition of the South Korean crypto exchange, Gopax. Speculations abound as to why the full $1 billion pledged has not been used for its original purpose. Binance moved the remaining $985 million to its corporate treasury, with funds later converted from BUSD to cryptocurrencies such as BTC due to growing regulatory concerns around stablecoins.
The large capital commitment, contrasting significantly with the actual contributions, has garnered criticism amidst an industry-wide scramble for funding. Reports from the blockchain analytics firm, Messari indicate a staggering 70% drop in cryptocurrency-related venture funding from Q3 2022.
In another development, Binance-backed Alameda Research redeemed over $38 billion for Tether USDT tokens in 2021, despite not having equivalent assets under management. The surprising fact was that the value of USDT creation was higher than Alameda’s total assets at the peak of the cryptocurrency bull market run in 2021.
These moves have raised eyebrows across the crypto industry, leaving many speculating on the true effectiveness of exchange-managed recovery initiatives. Several questions have surfaced as a result of these actions. Is there validity to these initiatives, or are they a smokescreen obscuring more complex maneuvers within these giant corporations? Are we witnessing the meticulous strategy of informed firms or mere opportunistic moves during a financial crisis?
While the blockchain industry continues to evolve at a rapid pace, only time will tell if these maneuvers will ultimately prove to be enlightening strides or hubristic missteps in the grand scheme of the crypto industry.