CRYPTO FIRMS THAT ARE NOT WORKING WELL AND PROVIDE POOR SERVICES SHOULD BE CRUMBLE: BINANCE CEO
Binance founder and CEO Changpeng "CZ" Zhao says "bad" crypto projects should be abandoned in order to fail and not get bailouts from crypto companies with healthy savings.
In a June 23 blog post, CZ said firms that are malfunctioning, mismanaged or producing poorly designed products should not be granted bail - and should be left to fade:
“In short, the projects are just‘ bad ’. These should not be kept. Sadly, some of these ‘bad’ designs have a large number of users, often obtained with high compensation, ‘smart marketing, or pure Ponzi schemes.”
“Moreover, in any industry, there are always more failed programs than successful ones. I hope the failure is small, and the success is great. But you get the idea. Spending money here doesn't make sense, ”he added.
These comments come amid the recent steps of crypto billionaire Sam Bankman Fried and his firm Alameda Research to rescue companies and projects with the latest financial problems like Voyager Digital with flexible loans of 350 million USD Coin (USDC) and 15,250 BTC, which is a fair amount. $ 464.48 million at the time of writing.
CZ went on to point out that Binance may be looking to support certain fundraising firms that may be "problematic but fixable" or "barely surviving but have great potential."
“A lot of projects have come to us wanting to discuss and discuss. And, in real life, these categories are not clear labels. All projects consider themselves in the third phase, and we need to look at each project in detail in order to determine. There is humility in it, ”he said.
Several firms are facing financial crisis due to the current bear market, while others are struggling due to exposure to potentially insolvent industries and projects such as Three Arrows Capital and Celsius.
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Binance's CEO comments echo similar sentiments from US Securities and Exchange Commission (SEC) commissioner Hester Peirce on Tuesday, who strongly opposed crypto bailouts.
In an interview with Forbes on June 21, a crypto-friendly commissioner known as "Crypto Mom" argued that instead of rescuing struggling companies, it was better to "let these things play well" to build a sustainable industry.
"When things get tough in the market, you find out who really is building something that can last a long time, and what will pass," he said.
On June 23 CZ said during a weekly interview with Bloomberg Business his company's mission to support independent based projects could operate without a central authority or leader, as opposed to a traditional central model.
The CEO also referred to his company as an “organization” and its employees as “team members,” as part of this geographical distribution policy.
However, the publication quoted former Binance employees who did not disclose that the company could not be divided as claimed, claiming that CZ was the sole authority over the company and its business decisions.
"At the end of the day, he's the company," a former employee told the newspaper.
The angle of the Bloomberg article may need a bit of salt, as CZ has never explicitly stated that Binance was a respected company despite his stand for the idea. Although Binance Smart Chain claims to be an eco-system but has drawn legitimate criticism of the lack of this in the past.