Binance CEO Changpeng Zhao’s plan to rescue the cryptocurrency market has fallen short of expectations eleven months after launch.
Since launching the Industry Recovery Initiative (IRI), the company has spent just under $15 million of an announced $1 billion fund, Bloomberg wrote.
Last year was affected by two major falls that caused the market to appreciate at a minimum; the Terra Network and the cryptocurrency exchange, FTX.
After the FTX collapsethe ripple effect was seen in both falling asset prices and distressed companies that were exposed to the company.
Zhao became a hero when he announced a plan partnering with major industry players to raise $1 billion to save startups within the ecosystem. Notable companies like Jump Crypto and Animoca Brands joined the fund.
Binance has spent only $15 million of its total commitment and has now transferred the remaining $985 million to its corporate treasury.
Prior to this, the exchange announced a conversion of BUSD to other cryptocurrencies citing growing regulatory pressure on stablecoins.
Projects financed by the IRI
So far, Binance claims that the industry rescue fund has been applied to 14 projects, although 13 of these remain undisclosed announcing only the funding of Gopax, a South Korean cryptocurrency exchange.
At the time, CZ emphasized the importance of the fund to save web3 projects and added that,
“The industry recovery initiative was created to support promising companies that were negatively affected by the events of last year. We hope that taking this step with GOPAX will further rebuild the Korean crypto and blockchain industry.
A few months after the IRI m announcement, some 18 companies had also contributed $100 million to the cause, although only nine were publicly identified.
Jump Crypto committed $25 million, while DWF Labs budgeted $15 million and has used $2 million with a withdrawal of $14 million.
Aptos, on the other hand, pledges $5 million and has used the same amount for the project. Although the fund remains underutilized, Binance has explained that most companies did not meet the criteria.
“We didn’t identify that many projects that met our criteria, and that’s the same for other investors.” Dan Hou, Head of Strategy and Business Operations at Binance.
The negative impact of FTX on VC funding
The impacts of the post-FTX saga can be seen in the drop in venture capital investments from the third quarter of 2022.
Blockchain intelligence company Messari pointed this out Venture capital volume last quarter was $2.1 billion down from its all-time high of $17 billion in 2021.
VC volumes in crypto fell 36% from Q2 2023 after seeing slight growth from numerous one-off Bitcoin ETF applications amid renewed institutional demand.
In total, venture capital volumes in crypto assets have decreased by 70% since the collapse of FTX, although recent developments show a slight change in the position of institutional investors.