Binance CEO says bailouts for bad projects ‘don’t make sense’ 🚨 This article is 3 years old...
Binance CEO says bailouts for bad projects ‘don’t make sense’
CZ wrote that bad projects should not be saved regardless of the number of their users.
2 min read
Updated: Jun. 23, 2022 at 4:12 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Binance CEO Changpeng ‘CZ’ Zhao said bad projects should be allowed to fail and Binance has no intention of offering “bailouts” to such projects.
In the blog post titled “A Note on Bailouts and Crypto Leverage,” CZ said that Binance has to help “industry players survive and hopefully thrive” even if the company does not gain anything from such help.
CZ categorizes bailouts
He continued that there are different types of bailouts. He believes some projects or companies are bad, which is visible in their poor design, management, and operations.
Such projects do not deserve to be saved regardless of the number of users they might have. According to CZ:
Bailouts here don’t make sense. Don’t perpetuate bad companies. Let them fail. Let other better projects take their place.
The second category comprises projects with fixable problems. These projects made mistakes, like spending too much or saving too little.
CZ said companies with these good qualities and fixable problems should be bailed out and “made to fix the problems that led them to this situation in the first place.”
In the third category, projects with great potential but have struggled to survive because of limited budgets should be classified as great investment assets. CZ added that the Binance deals team has been in talks with these kinds of projects lately.
Talks about bailouts on the up
CZ shared his view just a few days after SEC commissioner Hester Peirce said she doesn’t support bailouts for crypto companies. According to Peirce, the market crash is a chance for bad projects to collapse.
Meanwhile, FTX and Alameda Research CEO Sam Bankman-Fried recently said his companies might step in to prevent contagion in the industry.
Alameda Research has issued a loan of $200 million USDC and a revolving line of credit of 15,000 BTC to the crypto brokerage firm Voyager Digital.
Additionally, FTX has also offered a $250 million loan facility to BlockFi.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
BlockFi
BlockFi is a defunct cryptocurrency lender company which is currently in bankruptcy proceedings.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
Hester Peirce, known as the “Crypto Mom” for her pro-cryptocurrency and blockchain stance, was sworn in as Commissioner of the U.S.
