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Binance

Binance CEO’s Risky Bet: $1 Billion Rescue Fund Crashes

Ronaldo Marquez
by Ronaldo Marquez
1 year ago
·
Posted in Binance
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

In the wake of FTX’s collapse, the crypto industry was plunged. Prices plummeted, investors scrambled to cut their losses, and startup funding evaporated. Amid the chaos, the spotlight turned to Changpeng Zhao, the founder of Binance, as the last remaining tycoon in the crypto world after the swift fall of Sam Bankman-Fried. 

With a grand vision to rescue struggling startups, Zhao rallied industry leaders to raise a minimum of $1 billion. However, according to Bloomberg, the Industry Recovery Initiative (IRI) fell short of expectations nearly a year later, leaving the crypto market starved for cash and companies on the brink of collapse.

Changpeng Zhao’s $1 Billion Rescue Plan Fails To Deliver

Per the report, Zhao’s plan aimed to provide a lifeline to promising startups facing financial constraints beyond their control. Time was of the essence, as Zhao emphasized in a Bloomberg Television interview on November 24. 

However, a recent analysis by Bloomberg News of public digital-asset wallets associated with the IRI reveals that less than $30 million has been deployed since its inception.

Related Reading: Ethereum Foundation Under Attack, Selling 1,700 ETH Cost Them This Much

Only one of the nine named participants has invested all their committed funds. This lackluster outcome has left the crypto asset sector struggling, with companies forced to downsize and cut jobs to remain afloat.

While several well-known companies, including market maker Jump Crypto and Animoca Brands, joined the IRI with around $70 million in funds, none came close to Binance’s roughly $1 billion contribution in its branded stablecoin Binance USD (BUSD). 

According to Bloomberg, the IRI was structured differently from a traditional fund, with participants having the freedom to invest their committed funds as they saw fit, whether through acquiring stakes in companies or outright acquisitions. Binance claimed 18 companies participated, but only nine were publicly identified.

Binance Rescue Initiative Raises Questions

Transparency was a key selling point of the IRI, as Zhao emphasized using public wallets to ensure accountability. However, the initiative fell short of this promise, according to Bloomberg. 

Allegedly, Binance has since moved $985 million of the committed funds back to its corporate treasury for other investments. The last publicly announced deal through the IRI was Binance’s $15 million majority stake purchase in South Korean crypto exchange GOPAX, pending regulatory approval.

Related Reading: Sam Bankman-Fried Trial: FTX Founder’s Defense Shenanigans Catches Judge’s Attention

While Binance’s intentions to rescue the crypto market were commendable, the lack of follow-through has raised concerns about the industry’s future. Venture capital investment in crypto firms plummeted after the FTX collapse and has struggled to recover. 

Startups face challenges in securing funding, with deals taking longer to close. The consequences are dire, leaving many startups in precarious positions and hindering their growth prospects.

Binance
BNB’s retrace after failing to surpass the upper resistance wall on the daily chart. Source: BNBUSDT on TradingView.com

As of the current writing, Binance Coin (BNB) is trading at $207, showing a slight increase of 0.1% over the past 24 hours. On Monday, BNB made an unsuccessful attempt to break through its nearest resistance level, located at $213.

Featured image from Shutterstock, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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