Binance Converts $1 Billion Industry Recovery Initiative Funds From BUSD To BTC, Ether And BNB

Updated: 13 March 2023

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In response to the most recent turmoil surrounding the USDC stablecoin, Binance, the world’s largest crypto exchange based on trading volume, converted the remaining money held in Binance USD (BUSD) from its $1 billion Industry Recovery Plan into Bitcoin (BTC), Ethereum (ETH), and BNB.

Binance CEO, Changpeng Zhao, announced the move on Twitter saying:” Given the changes in stablecoins and banks, Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB, and ETH. “

Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.

— CZ 🔶 BNB (@cz_binance) March 13, 2023

The “Industry Recovery Fund” was launched in November 2022, in the aftermath of the FTX collapse. Binance established the fund with the aim of saving strong companies facing a liquidity crisis.

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. 1/2

— CZ 🔶 BNB (@cz_binance) November 14, 2022

CZ also posted the link to the address for the Ethereum and Bitcoin transactions. He then stated that it took 15 seconds to transfer $980 million at a cost of $1.29.

The move attracted various reactions from the crypto community on Twitter. Some compared the move to when Do Kwon, founder of the Terra ecosystem, converted all their reserves to BTC right before the ecosystem collapsed which made it difficult for the company to recover. The conversion to BNB was also said to be similar to when FTX held reserves in its own token.

Remember when @stablekwon put all their reserves into $BTC just before it collapsed and totally destroyed their ability to recover? This is fuckin scary. And reserves in $BNB? Remember when FTX used their own token as reserves? Omg this is so bad lol

— Cameron Fous (@Cameronfous) March 13, 2023

On the other hand, others termed the move “pure gold” and suggested that the exchange considers other currencies such as CBDCs as an alternative to peg stablecoins.

The move may have inspired buying pressure since Bitcoin surged over $22,500 while Ether reclaimed the $1,600 mark during the Asian trading hours. According to CoinGecko data, BNB also rose over 10% to trade over $300, marking two-week highs.

USDC depegged then regained

CZ made the choice to convert the BUSD to native tokens due to the ongoing chaos amongst crypto-friendly banks as well as stablecoins. To begin with, the top three crypto-friendly banks have all been closed by US regulators. Silvergate Bank, Signature bank, and Silicon Valley Bank (SVB) were closed in a move many consider a way to drive out the crypto industry.

More specifically, the collapse of Silicon Valley Bank is the one that led to the depeg of USDC when Circle, the company that issues USDC, revealed that $3.3 billion of the USDC reserves were held in SVB. This in addition to Coinbase’s decision to temporarily stop USDC to USD conversions at the same time as the Circle announcement created a panic in the market that fueled the depeg.

Not only did USDC depeg to an all-time low of $0.87, but it also caused a dominos effect that resulted in other stablecoins de-pegging. The affected stablecoins were DAI, FLAX, and USDD which hold reserves in USDC.

Fortunately, USDC was able to recover back to $0.99 courtesy of a joint statement that was released by the Federal Reserve, Federal Deposit Insurance Corporation, and the US treasury which stated that all depositors would be able to access their funds on Monday, today.