After the collapse of FTX, Binance enjoyed several weeks of glowing press coverage about its commitment to spend $1 billion on helping the crypto industry. However, it appears that the wallet in question still holds nearly $1 billion BUSD and hasn’t spent anything.
In its initial announcement on November 24, 2022, Binance claimed that 150 companies had applied to this so-called Industry Recovery Initiative so it’s possible that Binance is still evaluating applicants and will disburse funds sometime in the future.
The exchange claimed to have an additional $50 million in commitments from other companies including Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, and Brooker Group.
Coincidentally, it looks like Binance.US is on the verge of acquiring Voyager Digital’s assets for approximately $1 billion. That acquisition recently received one of the required bankruptcy court approvals and could close by April 2023. However, it’s unclear whether it will be funded by Binance.com’s fund.
Binance also committed to a second $1 billion Industry Recovery Initiative. While Protos couldn’t find any wallet containing this promised second tranche, there’s a wallet identified as “Binance 7,” which follows Etherscan’s naming convention for Binance hot wallets.
This wallet does contain 1 billion BUSD, however, Binance hasn’t officially identified it as being related to its Industry Recovery Initiative. Likely an exchange hot wallet, it is the only other wallet containing approximately 1 billion BUSD.
Binance planned to focus on risk management
When Binance announced its original fund, it promised support for struggling crypto companies, including formation, technical execution, and further fundraising. It claimed it would focus on risk management, the potential for innovation and long-term value creation, and viable business operations.
The new fund appeared to be a response to FTX’s bankruptcy, which brought the now-defunct exchange’s acquisition blitz to a sudden halt. FTX had to back out of deals like the acquisition of Voyager Digital’s assets and BlockFi. It also froze billions of dollars in deposits, including assets belonging to big digital asset companies like Genesis Global Trading.
Binance looked set to follow FTX into the crypto savior business
Binance appears to have not used any of the funds it sent to the Industry Recovery Initiative, raising questions about its intentions. Of course, as mentioned, it is possible that it still intends to disburse funds in the future. There’s also the possibility that it’s using funds from some other source to fund the initiative.
But there are still many questions around exactly what else Binance could be planning to do with the funds.
For a while, Binance looked like it could go on an FTX-style acquisition blitz. As FTX’s meltdown sent shockwaves through an industry already hurting from the Terra stablecoin collapse, there was the opportunity for another big exchange to build a reputation for bailing out troubled companies. This looked like an opportunity that Binance was eager to grab just a few months ago.
In the meantime, investors have been slowly withdrawing assets from the exchange. From November 4, 2022, to January 4, 2023, assets at Binance declined by $12 billion. Investor withdrawals accounted for most of the decline. CZ attempted to downplay the importance of these withdrawals.
Protos has reached out to Binance for more information on the initiative and its related wallets and will update if and when we receive a reply.