12 Oct, 2023

Binance’s Effort on Raising $1B Falls Short with Only $30M Raised

Michael Healy
Written by
Michael Healy
Michael Healy Michael Healy Expert Author
Michael, an entrepreneur, and co-founder of Unit, is a full-stack, mobile, and blockchain developer with extensive experience in the crypto and blockchain industry since 2010. A leading token builder, Unit powers the token economy using the Polkadot-powered Unit Network blockchain. Michael has built a diverse portfolio with multiple successful exits, including encrypted P2P video conferencing,...
Shawn Munir
Fact checked by
Shawn Munir
Shawn Munir Shawn Munir Expert Author
Shawn Munir is the CEO of Coinweb.com and spearheads all the collaborative partnerships for the platform. He bought his first Bitcoin in 2017 and never looked back. He is also an investor in 200+ Web3 startups and is considered an expert in the field. Before building Coinweb with his co-founders, he co-founded Presail, a management...
binance falls short

TD;LR

  • Binance’s Industry Recovery Fund amassed only $30 million out of the $1 billion intended at its formation. 
  • The fund was meant to fund the rebuilding of the industry after FTX’s collapse but didn’t have any major investments. 

Binance’s Industry Recovery Initiative Slowly Dies

Amidst the turmoil following FTX’s collapse last November, the crypto world was in a state of chaos. 

As prices plummeted, investors scrambled to protect their stakes, and startup capital dried up.

Binance's Industry Recovery Initiative Gradually Falters
Binance’s Industry Recovery Initiative Slowly Dies | Source: The Information

Enter Changpeng “CZ” Zhao, Binance’s billionaire founder, who emerged as the leading figure in crypto following the rapid decline of Sam Bankman-Fried.

However, the grand ambitions of Zhao’s crypto salvage mission have largely gone unrealized. The Industry Recovery Initiative (IRI) has only managed to allocate under $30 million since its launch, which only counts as 3% of the total 1 billion intended. 

Of the nine publicly identified contributors, only one has fully invested its pledged amount. 

Consequently, the crypto domain continues to grapple with financial strain, leading many businesses to slash jobs for survival.

This mirrors the declining influence of Binance, currently embroiled in legal battles with two major US regulatory bodies, and figures like Zhao, once a frequent flyer on private jets who rubbed shoulders with global leaders and celebrities. 

“There was a significant lack of accountability concerning this recovery initiative.”

Clara Medalie, the research director at blockchain analysis firm Kaiko

Recovery Initiative Highlights – How Should The Fund Have Looked Like

Zhao highlighted the initiative’s transparency, emphasizing that funds would be stored in public wallets for open visibility, contrasting it from clandestine funds. However, the IRI fell short of these transparency claims.

The IRI backed 14 ventures but refrained from disclosing their identities or the allocated funds. 

From the pledged funds to IRI, Binance redirected $985 million back to its corporate reserves, intending to repurpose it for future investments. 

Recovery Initiative Highlights for Binance
Recovery Initiative Highlights | Source: Bloomberg

As per prior Binance disclosures, the latest transaction via the initiative took place in February. 

Of the recognized IRI collaborators, six opted to remain silent or failed to address inquiries. 

Although blockchain creator Polygon Labs was a known participant, its public wallet relating to the IRI commitment remained unidentified. 

Despite multiple attempts, the firm abstained from revealing the wallet’s details.

Binance Is In Trouble – Will It Continue the Fund? 

For Zhao, the endeavor intended to bolster his reputation as a veteran in the crypto world has been overshadowed by bigger challenges. 

Zhao and Binance, the empire he founded, face legal actions from the CFTC and the SEC

Moreover, Binance is under the microscope of an ongoing multi-year inquiry led by the Department of Justice.

Regulatory authorities from regions ranging from Canada to Australia have recently grown increasingly wary of Binance, causing its influence to wane. 

Its global market influence significantly dipped before the CFTC lawsuit surfaced in February. 

Since then, Zhao, who previously mentioned logging 580 hours in air travel during the previous year, has taken a step back from the global crypto event circuit.

Approximately $32.4 million remains within the assorted public crypto wallets associated with the IRI. 

Beyond this, a Google Docs page used by the project for submissions serves as one of the lingering footprints of Zhao’s ambitious initiative and remains operational.

Do you think the fund will get its shot in the future?