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Binance is facing criticism over donations of its in-house cryptocurrency to Moroccan customers after the country’s deadly earthquake, with humanitarian relief experts describing it as a stunt designed to improve the exchange’s image.
The world’s largest crypto exchange this week said it would give up to $100 of its BNB token to about 70,000 existing customers, in a move worth up to $3mn.
But some aid experts have criticised it for donating tokens rather than readily usable cash or items such as food and blankets that survivors immediately need. Some also take issue with it helping only existing Binance customers rather than all victims of the disaster.
Iain Overton, executive director of charity Action on Armed Violence, said the initiative looked like a marketing ploy designed to show the company in a positive light.
“Those affected by the catastrophe will never hear of it, and those unaffected by the catastrophe may come away with a positive notion of [Binance’s] brand. It’s cynical at best,” he said.
Binance’s donation is the latest attempt by crypto firms to use digital assets as a way of supplying aid to victims of natural disasters or conflicts, including after Russia’s invasion of Ukraine and the deadly earthquake that hit Turkey and Syria earlier this year.
But such efforts have come under fire for being an ineffective means of getting help to those in need.
Overton said: “In post-disaster environments, most people are seeking the familiar. This isn’t a space for digital innovation and new financial tools. What people want is food, shelter, medical aid and space to grieve. They’re not looking for crypto.”
A spokesperson for the International Federation of Red Cross and Red Crescent Societies told the Financial Times that aid had to be in a form that would “help [people] meet their basic needs immediately”.
“If it is crypto, do they see that this is something that can help? If I don’t have food and I am in the middle of an earthquake, is crypto going to get me food and clean water right now? That’s what I need,” she said.
Binance’s charitable arm said in a statement: “Crypto transfers can be used to deliver urgent financial aid to disaster victims as they provide fast, low-cost, borderless, and transparent transactions. As needed, they can also be converted to local fiat currencies around the world.” It added that in addition to direct crypto donations to users, it would donate further funds raised from the public to local charities.
The Moroccan earthquake struck last Friday and has claimed the lives of at least 2,800 people and destroyed more than 30,000 homes. The government called on the public to donate blood and the army has been brought in to help deliver aid and conduct rescue operations.
Binance said in a press release it is identifying which users are eligible for the funds in the Marrakech-Safi province, based on a proof of address mechanism that had to be completed by September 9.
Those who could prove their address by the cut-off date are entitled to $100 worth of Binance’s native BNB crypto token. Those who complete the process by the end of the month will receive $25 worth of the token, and “active transacting” users living across Morocco but not in the affected area are entitled to $10 worth of the token.
“We hope we can bring some support to those affected,” said Binance chief executive Changpeng Zhao in a statement earlier this week. “For Moroccan users who receive these donations but are unimpacted by the earthquake, we ask them to pass the funds on to those most in need.”
However, critics noted the exchange’s initiative has not provided funds that are easy to spend. BNB tokens are not legal tender and Binance users will need to convert the funds into local currency before withdrawing money from a bank or cash machine.
“I get that they’re trying to do a good thing, but ultimately it [appears to be] a bit of a PR stunt,” said a manager at one major aid agency.
An employee of another agency said: “I honestly don’t know how Binance would have the infrastructure to be able to monitor the implementation of the money that they’re giving and where it’s going, and to ensure that it actually gets to the beneficiary.”
Rory Stewart, former UK cabinet minister and president of GiveDirectly, a non-profit that lets donors send money directly to the extreme poor, said his group has to date avoided donating funds in crypto because tokens are difficult to convert into cash to spend, and because the volatility of digital assets expose the economically vulnerable to undue risk.
Binance is facing lawsuits from key US regulators alleging it has illegally accessed US customers, violated securities laws and mixed billions of dollars of customer cash via a separate entity owned by Zhao.
Binance previously described a Commodity Futures Trading Commission lawsuit as “unexpected and disappointing”. It said it was disappointed and disheartened by a separate lawsuit filed by the Securities and Exchange Commission, which its US affiliate called “baseless”.