After the collapse of the FTX exchange in November last year, the cryptocurrency market fell into chaos. Bitcoin and altcoins were “in the red,” and investors were on edge.
In response to this situation, Binance established the Initiative for Recovery in the Industry (IRI), with a value of $1 billion, aimed at assisting cryptocurrency projects facing liquidity crises.
“The crypto industry needs rescue right now, not in 2023,” said Binance CEO Changpeng Zhao in a Bloomberg Television interview on November 24, 2022.
According to the initial announcement, 18 companies and large venture capital firms in the industry joined the fund, but only 9 of them publicly disclosed their identities and the amount of their investments. These include:
1. Binance: $1 billion support in the form of the stablecoin BUSD.
2. Jump Crypto: $25 million in BUSD.
3. DWF Labs: $15 million in USD with BUSD.
4. Aptos Labs and GSR: Each fund supports with $5 million in USDC stablecoin.
5. Kronos Research: $1 million in USDC.
6. Brooker Group: $1 million in the value of Bitcoin (BTC) at the time of November 2022.
7. Polygon Labs – The amount of support was not publicly disclosed.
Notably, Animoca Brands contributed $11 million in various tokens like APE, REVV, GMEE, TOWER, ASTRAFER instead of stablecoins.
In the plan, investment funds participating in IRI were required to commit to providing support in stablecoins to optimize funding. However, Animoca Brands, known as a “Web3 and GameFi giant,” contributed tokens from their investment portfolio, which have high price volatility according to market conditions.
Regarding the relief package, three months after its launch, IRI has provided support to 14 projects. However, the project names remain confidential. The only publicly disclosed investment of the fund is $15 million into the South Korean cryptocurrency exchange GOPAX. This deal was announced in February but is still pending approval from South Korea’s financial regulatory agency after a delay in the acquisition in July.
When asked about the “limited number” of supported projects, Dana Hou, head of business strategy and operations at Binance Labs, explained the reason: “Through the evaluation process, we found that many projects did not meet our criteria. Other investment funds have reported similar findings.”
Crypto market maker GSR also noted that they evaluated over 60 project applications for support but found none that fit IRI’s investment strategy.
As a result, nearly one year after the establishment of IRI with over $1 billion in funding, this initiative has disbursed less than $30 million, and all nine venture capital firms have essentially “withdrawn” their capital from IRI for various private purposes.
Currently, it is unclear whether IRI is still active in supporting cryptocurrency projects, as the Google Docs registration form is still operational.
The Binance Initiative for Recovery in the Industry aimed to provide financial support to projects facing difficulties. If successful, it would undoubtedly strengthen Binance’s position and the reputation of its CEO, Changpeng Zhao.
However, everything has gone “off track” from CZ’s calculations since Binance faced legal actions by the U.S. Commodity Futures Trading Commission (CFTC) for alleged derivatives trading violations. This was followed by a series of lawsuits from U.S. law enforcement agencies. In 2023, the cryptocurrency industry continues to struggle to attract investments. Many companies have significantly downsized, including Binance.
According to data from The Block Research, the investment capital for cryptocurrency startups dropped to a historic low of just over $500 million in August, the lowest in over two years.