Binance Introduces a $1B+ Industry Recovery Initiative
Binance’s Changpeng Zhao announced that his company might create a fund to help distressed companies within the crypto industry soon after FTX filed for bankruptcy. Today, his company introduced its Web3 Industry Recovery Initiative (IRI).
Binance’s Industry Recovery Initiative
On November 24th, Binance offered some details on the initiative in a blog post. The company stated it would commit $1 billion to a wallet intended for the IRI, and added they are planning to bring the total amount of funds up to $2 billion “in the near future if the need arises.”
According to the post, seven companies already joined the initiative adding a total of $50 million, and more firms are expected to soon make their commitments. Binance also disclosed that about 150 companies already applied for support from the IRI. Some of the support is expected to be provided only by Binance, and others as a joint effort of participating firms.
Binance also explained that the initiative isn’t an investment fund and that it is likely to remain live for a period of six months. While the application process requires companies to “set aside committed capital within public addresses to ensure transparency”, Binance is willing to try and find a way to work with firms that can’t send money to public wallets. CZ’s company also provided a contact for communications related to the IRI.
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Binance and the Fall of FTX
Binance has been in the spotlight almost as much as Sam Bankman-Fried’s company throughout the early stages of FTX’s collapse. Many consider CZ’s explanation of why his company is liquidating its FTT tokens akin to “the falling of small stones that starts an avalanche in the mountains” as it caused a lot of FUD regarding the health of SBF’s empire—FUD that was proven right as the full extent of FTX’s gross mismanagement and misappropriation of users’ funds became known.
The first public steps leading to the implosion of FTX came when both CZ and SBF disclosed that their companies signed a non-binding acquisition LOI to cover a severe liquidity crunch. The situation only became direr when Binance decided it couldn’t rescue its competitor after the initial steps of conducting corporate due diligence.
Finally, when the first signs of the FTX contagion started spreading, Binance’s Changpeng Zhao announced his company would be creating a recovery fund in an effort to help the crypto sector rebuild. Already on November 14th, CZ explained that the initiative will be intended for companies suffering from temporary issues due to unforeseen hardships.
To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.
Do you think Binance’s IRI will help limit the effects of the FTX contagion? Let us know in the comments below.