Binance founder and CEO Changpeng “CZ” Zhao argues that “bad” cryptocurrency projects should be allowed to fail and not be bailouted by crypto firms with healthy cash reserves.
In a June 23 post, CZ said that companies that have been poorly operated, mismanaged, or have released poorly designed products should not be bailed out — and instead should be flopped:
“In short, they are ‘bad’ projects. They should not be saved. Unfortunately, some of these ‘bad’ projects have large numbers of users, often acquired through inflated incentives, ‘creative marketing,’ or outright Ponzi schemes.”
“Also, in any industry, there are always more failed projects than successful ones. Hopefully, the failures are small and the successes are big. But you get the idea. Bailouts here are pointless,” he added.
The comments come amid recent moves by crypto billionaire Sam Bankman Fried and his firm Alameda Research to bail out recently cash-strapped companies and projects, such as Voyager Digital, with a 350 million USD Coin (USDC) revolving loan. and 15,250 BTC, which is equivalent to $464.48 million at the time of writing.
CZ went on to note, however, that Binance could seek support from some cash-strapped companies that either have “problems but are solvable” or “barely surviving but have great potential.”
“A lot of projects have come to us wanting to engage and talk. Again, in real life, these categories are not clear labels. All projects see themselves as the third category, and we have to look at each project in detail to decide. There’s a certain subjectivity in it,” he said.
Several companies are suffering from liquidity problems as a result of the current bear market, while others are reeling from their exposure to potentially insolvent companies and projects, such as Three Arrows Capital and Celsius.
The comments from the Binance CEO echo the similar views of the United States Securities and Exchange Commission (SEC) Commissioner Hester Peirce, who on Tuesday came out against cryptocurrency bailouts.
In an interview with Forbes on June 21, the pro-cryptocurrency commissioner known as “Crypto Mom” argued that instead of bailing out struggling companies, it is better to “let these things play out” to create an industry. more sustainable.
“When things are a little more difficult in the market, you find out who is really building something that could last in the long, longer term and what is going to happen,” he said.
Centralized Binance
On June 23, CZ stated 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, as opposed to the traditional centralized model.
The CEO also referred to his own company as an “organization” and his employees as “team members” as part of this decentralization mission.
However, the post cited comments from anonymous alleged former Binance employees saying that the company might not be as decentralized as claimed, stating that CZ has sole authority over the company and its business decisions.
“At the end of the day, he is 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 his defense of the concept. Although Binance Smart Chain claims to be a decentralized ecosystem, it has received valid criticism in the past for its absence.
While CZ has taken aim at poorly managed companies this week, Binance’s management structure has also come under fire.
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