Binance's $1 billion crypto recovery fund deployed less than $30 million: Bloomberg

Binance’s Industry Recovery Initiative (IRI) was announced in the wake of FTX’s collapse to help crypto projects that were otherwise strong but faced a liquidity crisis. However, the initiative has deployed less than $30 million so far, Bloomberg reported.

Binance allocated approximately $1 billion in its BUSD stablecoin to the initiative itself, and other crypto firms, including Jump Crypto, DWF Labs, Animoca Brands, Aptos Labs, GSR, Kronos Research, Booker Group and Polygon Labs, added a further $70 million. However, only one out of nine publicly named participants, Aptos Labs, fully invested their pledged funds, Bloomberg noted. Binance said 18 companies participated in total.

In a November interview with Bloomberg, Binance CEO Changpeng Zhao pitched the recovery fund as a transparent initiative. However, while a Binance spokesperson told Bloomberg the IRI had financed 14 projects, it declined to name them or how much they received.

Binance moved $985 million of the funds it committed to the initiative back to its corporate treasury for other investments, the spokesperson added.

IRI investments

Binance's sole public investment was a $15 million stake in the South Korean crypto exchange GOPAX. The deal was announced in February, but it is still awaiting approval from South Korea’s financial regulator after it postponed the acquisition in July.

The original address used for the initiative shows two outgoing transfers of approximately $15 million and $985 million after Binance added the $1 billion in BUSD to the address. It currently displays a balance of about $1,500 in ether and other tokens.

Other than Binance, DWF Labs reportedly deployed $2 million of its $15 million IRI commitment and Aptos Labs “more than” the $5 million it committed. The other participants either failed to deploy any funds or could not be identified, Bloomberg said. 

“We didn’t identify many projects who would meet our criteria, and this is the same for the other investors,” Binance Labs’ business strategy lead Dana Hou told Bloomberg. 

Crypto market maker GSR evaluated 60 applications, but none fit its strategy, a person with knowledge of the matter who asked not to be identified discussing private information told Bloomberg. Other participants declined to comment or failed to respond.

"As of February 2023, the Industry Recovery Fund (IRI) received backing from 18 organizations that committed $1.1 billion and funded 14 projects," a Binance spokesperson told The Block via email. "We remain committed to supporting the industry — although given the fact that crypto prices have recovered well above post-FTX levels, there are not as many companies in need of help."

"We'd also note that applications into the IRI dropped significantly, which is also a good sign that the industry is regaining its health," the spokesperson added. "We will keep funds available, as needed, but they will sit in our corporate wallets rather than in the IRI wallet. We will handle future acquisitions through business as usual."

The Google Forms page for IRI applications remains active.

Binance's Industry Recovery Initiative and crypto investment woes 

The fund was first announced on Nov. 14, 2022, just days after crypto exchange FTX collapsed. Zhao, whose tweets about selling FTT helped trigger FTX’s liquidity crisis, vowed to be more critical of rivals at the time.

The following week, Zhao revealed the $1 billion target in a television interview with Bloomberg. "If that's not enough we can allocate more," Zhao said in the interview. “The industry needs saving now, not in 2023.”

However, despite the initiative's plans, the crypto sector has continued to struggle for investment this year, with many firms undergoing significant job cuts — including Binance. Venture funding for crypto startups fell to a low point not seen in over two years in August at less than $500 million, according to data from The Block Research. 

VC funding. Image: The Block Pro Research.

Updated with comment from Binance.