Binance CEO CZ has argued that crypto firms that have been poorly managed, poorly operated, or have released poorly designed products should be left to crumble.
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 subjectiveness to it,” he said.
A number of firms are undergoing liquidity issues as a result of the current bear market, while others are reeling from exposure to potentially insolvent firms and projects such as Three Arrows Capital and Celsius.
The comments from the Binance CEO echo similar sentiments from U.S. Securities and Exchange Commission (SEC) commissioner Hester Peirce on Tuesday, who argued against crypto bailouts altogether.
In an interview with Forbes on June 21, the crypto-friendly commissioner known as “Crypto Mom” argued that instead of bailing out struggling firms, it's better to “let these things play out” to create a more sustainable industry.
“When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer term and what is going to pass away,” she said.
On June 23 CZ stated during an interview with Bloomberg Business week the mission of his company 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 mission of decentralization.
However, the publication cited comments from supposed anonymous former Binance employees saying that the company may not be as decentralized as claimed, stating that CZ has the sole authority over the company and its business decisions.
"At the end of the day, he'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 his advocacy for the concept. Although the Binance Smart Chain does claim to be a decentralized eco-system but has drawn valid critiques over a lack of such in the past.
While CZ has taken aim at poorly managed companies this week, the management structure of Binance has also been brought into question.