On October 10, Bloomberg published an article, stating that Binance’s Industry Recovery Initiative (IRI) has "quietly fizzled out". It turned out that out of $1,05 billion allocated for this initiative, only $30 million have been spent on the intended purposes. This is happening during a prolonged fall in the price of BNB.
What is the Industry Recovery Initiative
On November 14, 2022, Binance head Changpeng Zhao announced the forming of a fund to help crypto projects that were facing problems due to the FTX crash. He also invited other major industry players to invest as well.
As a result, on November 24, Binance launched the Industry Recovery Initiative. Its main purpose was to select promising Web3 projects that need funds to “grow stronger from the crypto winter”.
According to the statement, Binance allocated $1 billion, expressed readiness to add more if necessary, and said that several large companies had also joined the initiative, with a total investment of $50 million.
It is noteworthy that Binance promised the projects’ all-round support (promotion, technical implementation, and so on), not only financial aid.
By the way, FTX founder Sam Bankman-Fried (SBF), founder of FTX, after the collapse of Terra Luna, had launched a similar initiative. Unlike Binance, he did not want to invest in projects but offered to buy cryptocurrency companies that faced problems. SBF indeed purchased a few projects, but a half a year later FTX went bankrupt.
Bloomberg’s analysis
Bloomberg's analysis of the IRI uncovered several key points:
1) Eighteen companies invested in the initiative, but only nine of them are publicly known.
In the screenshot below, you can see the list of companies and their investments in the initiative based on the onchain analysis. As noted, “Brooker Group injected an additional $2.8 million in Bitcoin on June 8. A wallet for Polygon Labs could not be identified. All data as of October 9”.
2) A Binance spokesperson told Bloomberg that IRI has funded 14 projects but refused to name them or give any specific numbers.
At the same time, it is publicly known only about the first investment in the South Korean exchange GOPAX for $15 million on February 3, 2023.
3) The exchange transferred $985 million from the IRI wallet to its corporate treasury, according to the Binance representative.
Clara Medalie, director of research at blockchain analytics firm Kaiko, said IRI had problems with accountability: "There wasn't much of that for this recovery fund".
4) Andrei Grachev, CEO of DWF Labs, a company that invested $15 million in IRI, has a low opinion of IRI's results.
“If we take a look from a monetary perspective, the overall impact is not great”, he states. At the same time, as he notes, IRI is not only about numbers but also about connections and networking: “All of us talked to projects or founders and tried to help them”.
In general, Bloomberg describes the activities of Changpeng Zhao, IRI, and Binance in rather negative tones: “Perhaps the most visible reminder of Zhao's plan to save crypto is the Google Docs page the project uses for applicants, which is still active”.
The article also highlights the problems with regulators that the exchange has been facing lately, Currently, there are lawsuits by the US Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), as well as years-long investigations by the Department of Justice.
Read more about Binance’s problems in our article: What’s up with Binance: is it really going to collapse?
BNB price condition
Binance's uncertainties over the course of the crypto winter are evident in its exchange token BNB, which is also the native BNB Chain cryptocurrency. Take a look at the monthly chart below.
The price is not far from an important support level (black horizontal line). If it breaks down, there is a risk of a strong further drop in value. At the moment, BNB's price is around $207, with capitalization of $32 billion, according CoinMarketCap. BNB is the fourth largest coin by that measure.
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