Binance’s Industry Recovery Initiative (IRI), an ambitious co-investment project aimed at bolstering the cryptocurrency industry following the fallout from the FTX collapse, appears to have fallen short of its intended impact, according to a recent report.
In November 2022, Binance introduced the IRI, committing a staggering $1 billion in BUSD (Binance USD) stablecoins to aid the cryptocurrency ecosystem’s recovery. However, as of October 10, a mere $15 million of these BUSD stablecoins had been spent, representing a mere 2.7% of the total pledged amount. Furthermore, Binance has yet to provide details about the entities that have benefited from these funds.
Binance’s strategy took an interesting turn when it decided to reallocate the remaining $985 million of pledged BUSD back to its corporate treasury for investment purposes. In March, the exchange transformed these funds into various cryptocurrencies, including Bitcoin, citing mounting regulatory concerns surrounding stablecoins.
The IRI managed to secure an additional $100 million in contributions from 18 other organizations by February 2023. Notable contributors included Animoca Brands, Aptos Labs, Jump Crypto, and Polygon Ventures, among others. Three months after its launch, the IRI announced that it had financed 14 projects; however, the specific names of these companies remained undisclosed. The sole publicly acknowledged expenditure from Binance’s $1 billion IRI commitment was its acquisition of the South Korean crypto exchange Gopax, which was made public in early February.
Based on data obtained from wallets by Bloomberg, the IRI has disbursed less than $30 million since its inception in the previous year. Among the nine participants who were identified, only DWF Labs and Binance-backed Aptos had utilized some of the committed funds.
The IRI’s current status regarding its support for cryptocurrency projects remains unclear, as its Google Docs applicant form remains active.
This discrepancy between high capital commitments and actual contributions within the IRI raises questions within the cryptocurrency industry, which is grappling for funding. A recent report from blockchain analytics firm Messari revealed that cryptocurrency-related venture funding in the third quarter of 2023 had plummeted by as much as 70% compared to the same period in 2022. This drop was significant, with Q3 2023 seeing only around $2 billion in crypto VC funding, down from the peak of $17 billion in Q1 2021.