Binance CEO’s $1 Billion Crypto Market Rescue Plan Falls Short
Binance CEO Changpeng Zhao’s plan to rescue the cryptocurrency market through the Industry Recovery Initiative (IRI) has not lived up to expectations. Despite announcing a $1 billion fund, Binance has only spent less than $15 million so far, according to Bloomberg. The market was heavily impacted by the collapse of FTX and the Terra Network last year, leading to sharp declines in asset prices and struggling firms.
Zhao’s plan aimed to raise $1 billion by partnering with industry players to save startups within the ecosystem. Notable firms like Jump Crypto and Animoca Brands joined in the fund. However, Binance has now transferred the remaining $985 million to its corporate treasury.
Projects Funded Since IRI Launch
Binance claims that it has applied the industry rescue fund to 14 projects, with Gopax, a South Korean cryptocurrency exchange, being the only publicly disclosed recipient. Other firms that contributed to the fund include Jump Crypto, DWF labs, and Aptos. However, most firms failed to meet the criteria for funding, according to Dan Hou, head of Business Strategy and Operations at Binance.
Negative Impact on VC Funding from FTX Collapse
The effects of the FTX collapse can be seen in declining venture capital investments in the crypto market. VC volume in Q3 2022 stood at $2.1 billion, down from its all-time high of $17 billion in 2021, as reported by Messari. The collapse of FTX has led to a 70% decrease in VC volumes in crypto assets. However, there are signs of a slight change in institutional investors’ stance.
Hot Take: Binance’s Crypto Market Rescue Plan Fizzles Out
Binance’s ambitious plan to rescue the crypto market with a $1 billion fund has fallen short, with less than $15 million spent so far. Despite the market turmoil caused by the collapse of FTX and the Terra Network, Binance has transferred the majority of the fund to its corporate treasury. Only one project, Gopax, has been publicly disclosed as a recipient of the fund. The decline in VC investments in the crypto market since the FTX collapse further highlights the challenges faced by startups in the industry. Binance’s IRI may not have achieved its intended impact, but it sheds light on the difficulties faced by struggling firms in the crypto ecosystem.
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