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 have been poorly operated, poorly managed or have released poorly designed products shouldn’t receive bailouts — and should instead be left to crumble:
“In short, they are just ‘bad’ projects. These should not be saved. Sadly, some of these ‘bad’ projects have a large number of users, often acquired through inflated incentives, ‘creative marketing, or pure Ponzi schemes.”
“Further, in any industry, there are always more failed projects than successful ones. Hopefully, the failures are small, and the successes are large. But you get the idea. Bailouts here don’t make sense,” he added.
The comments come amid recent moves by crypto billionaire Sam Bankman Fried and his firm Alameda Research to bail out companies and projects with recent liquidity troubles such as Voyager Digital with a revolving loan of 350 million USD Coin (USDC) and 15,250 BTC, which is worth $464.48 million at time of writing.
CZ went on to note however, that Binance could look to support some cash-light firms that either have “problems but are fixable” or are “barely surviving but have great potential.”
“Many projects have come to us who want to engage and talk. Again, in real life, these categories are not clear labels. All projects view themselves as the third category, and we need to look at each project in detail to decide. There is some…