Binance’s web3 Focused Fund Launch
On 1st December 2022, Binance announced the launching of its newly formed fund called the ‘Industry Recovery Initiative (IRI)’.
According to the world’s leading centralized crypto trading platform, Binance, the fund has been established for supporting web3.
It said further that the fund offers great investment opportunities mainly to the corporate sector which is highly interested in web3.
The announcement detailed that initially IRI will be funded by $1 Billion which shall be pooled by Binance. Later on another $1 Billion will be injected into the fund in case a need emerges in the future.
It was told by Binance that for kickstarting the fund, several organizations have already given their consents to pooling approximately $50 Million collectively.
According to Binance, the committed organizations include organizations such as Polygon Ventures, GSR, Brooker Group, Jump Crypto, Kronos, etc.
An Initiative for Confidence Building and Reinstating Trust
It was explained by Binance that its aim is to target highly innovative risk-free projects which can offer viable business opportunities.
Binance noted that the purpose behind taking the IRI initiative is to restore balance in the crypto industry by reinstating public trust in web3.
Binance CEO Explanation
Prior to Binance’s announcement, it was the company’s CEO, Changpeng Zhao, who revealed that Binance was going to launch a fund.
He mentioned in his tweets, and later in an interview, that the fund would be a ‘crypto industry recovery fund’.
The purpose of the fund would be to help the major and medium-level projects in the crypto industry that end up facing liquidity issues.
The cryptocurrency industry has been facing major liquidity issues and the year 2022 has been very cruel to the industry. This is the time when the entire crypto industry needs to back each other.
Zhao explained that the IRI fund had become necessary for erasing negative sentiments that emerged from FTX’s bankruptcy.
He said that the funds in IRI shall be spent for aiding crypto platforms that would be struggling against liquidity crisis.
However, funds shall be provided to them only if it is certain that they can survive and have strong business models.
According to Binance’s CEO, the reasons behind FTX’s collapse were the same as were present in the 2008 crisis which led many into bankruptcy. He also cautioned against the ‘cascading impact’ emanating from FTX’s downfall.
FTX’s founder filed an application before the US regulator seeking protection under bankruptcy.
After filing the application, the CEO resigned from FTX which was then followed by multiple investigations against FTX and CEO.
Allegations include mishandling of public funds, fraud, and price manipulations. Initially, Sam Bankman-Fried provided assurances that people’s funds were safe and he had enough to cover their losses.
However, as things started to unravel, the situation became more threatening to the crypto sector than the industry had imagined.
Prior to unveiling the allegations, Binance came up with an offer in which it showed its intention of acquiring FTX. However, the proposal was taken back by Binance upon it came to know of the serious allegations against FTX.
IRI Is Not an ‘Investment’ Fund
It has been further clarified by Binance that IRI should not be classified as an investment fund.
Binance’s CEO informed that they have already received more than 150 applications from firms nearing collapse due to liquidity crisis.
Changpeng Zhao has stated that they are glad that they launched the recovery fund because they knew the crisis created by FTX will not end soon.
The problem may persist and more companies within the crypto-verse would continue facing financial crises. Therefore, they have decided to keep up with their recovery fund and add more to it in the future.
This is one of the most effective solutions they could come up with during these difficult times. They hope that their effort will eventually help the entire cryptocurrency industry get back on its feet.