Binance founder and CEO Changpeng “CZ” Zhao argues that “bad” crypto projects should be left to fail and not receive bailouts from crypto firms with healthy cash reserves.
In a June 23 blog post, CZ said that firms that operate poorly, have been poorly managed or have released poorly designed products should not receive bailouts – and should instead be uprooted. should be left for:
“In short, they are just ‘bad’ projects. They should not be saved. Sadly, some of these ‘bad’ projects have large numbers of users, often referred to as increased incentives, ‘creative marketing, or pure Ponzi’.” achieved through schemes.
“Also, in any industry, there are always more unsuccessful projects than successful ones. Hopefully, failures are small, and successes are big. But you get the idea. There is no point in bailouts here,” he said .
The comments come amid recent moves by crypto billionaire Sam Banksman Fried and his firm Alameda Research, which have been dealing with recent liquidity problems such as Voyager Digital with companies with $350 million worth of coins (USDC) and 15,250 BTC of revolving debt and projects to salvage. $464.48 million at the time of writing.
However, CZ noted that Binance may be looking to support some cash-light firms that have “problems but can be fixed” or “barely alive but have great potential.”
“Many projects have come to us who want to connect and talk. Again, in real life, these categories are not clear labels. All projects see themselves as a third category, and we need to look at each project in detail to make a decision. There is some subjectivity to it,” he said.
Many firms are going through liquidity issues as a result of the current bear market, while others are exposed to potentially insolvent firms and projects such as Three Arrows Capital and Celsius.
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Binance CEO’s remarks on Tuesday echoed similar sentiments from US Securities and Exchange Commission (SEC) Commissioner Hester Peirce, who argued against an outright crypto bailout.
In an interview with Forbes on June 21, the crypto-friendly commissioner known as “Crypto Mom” argued that it was better to “let these things play out” to create a more sustainable industry, rather than kick out struggling firms. Is.
“When things get a little tough in the market, you get to know who’s really going to build something that can last a long, long time and what’s going to pass,” she said.
On June 23, CZ said during an interview with Bloomberg Business Week that his company’s mission is to support autonomous blockchain-based projects that can operate without a central authority or leader, unlike traditional centralized models.
As part of this mission of decentralization, the CEO refers to his company as the “organization” and his employees as “team members”.
However, the publication cited comments from alleged unnamed former Binance employees that claimed that the company cannot be decentralized as saying that CZ has sole authority over the company and its business decisions.
“At the end of the day, that’s the holding company,” a former employee told the publication.
The angle of the Bloomberg article may require a pinch of salt, given that CZ has never explicitly stated that Binance was a decentralized company, despite their advocacy for the concept. Although Binance SmartChain claims to be a decentralized eco-system, it has in the past held valid criticism over such deficiencies.
While CZ has this week targeted companies with poor management, Binance’s management structure has also been brought into question.