Quiet demise of a crypto rescue plan

Zhao's plan was to pull together some of the industry's biggest names and raise at least $1 bn to finance promising startups that were strapped for cash.

In the chaotic aftermath of crypto exchange FTX's unraveling last November, the industry was in disarray. Prices were tumbling, investors were frantically trying to limit their exposure to the sunken platform, and startup funding was evaporating.

Then Changpeng "CZ" Zhao, billionaire founder of Binance and lone surviving titan of crypto after Sam BankmanFried's swift fall, stepped in.

Zhao's plan: to pull together some of the industry's biggest names and raise at least $1 billion to finance promising startups which, due to forces outside their own control, were strapped for cash. Time was of the essence. "The industry needs saving now, not in 2023," Zhao said in a 24 November Bloomberg Television interview.

Not much has come of Zhao's grand plan to rescue crypto. The Industry Recovery Initiative (IRI), as it was called, has deployed less than $30 million since its inception, a Bloomberg News analysis of public digital-asset wallets linked to the project indicates. Only one of nine named participants has invested all the funds it committed. The cryptoasset sector, meanwhile, remains starved for cash and companies are cutting jobs to stay afloat.

The quiet unwinding of the IRI is a stark reminder of crypto's penchant for making bold promises it doesn't always deliver on. It also echoes the much-diminished stature of Binance, which is facing lawsuits from two major US regulators, and of founders like Zhao, who once crisscrossed the world in private jets and mingled with heads of state and celebrities. Bankman-Fried, who just months before FTX's implosion had embarked on an industry bailout of his own, is now on trial on fraud charges in New York.

"It's a matter of accountability, and there wasn't much of that for this recovery fund," said Clara Medalie, director of research at blockchain analytics firm Kaiko.