Binance founder CZ strongly opposed Bad crypto projects bailouts

CZ, the Binance CEO has claimed that crypto firms that have been poorly managed, poorly operated, or have released poorly designed products should be left to crumble.

The Binance founder and CEO Changpeng “CZ” Zhao agreed that “bad” crypto projects should be left to fail and not receive bailouts from crypto firms with healthy cash reserves.

In a blog post on June 23, CZ claimed 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.”

He added, “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”.

The comments come in the context of 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 as of now.

CZ went on to add, nevertheless, 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.”

He added “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”.

As a result of the current bear market, a number of firms are undergoing liquidity issues, while others are reeling from exposure to pot initially insolvent firms and projects such as Three Arrows Capital and Celsius.

Binance CEO echoed similar sentiments from U.S. Securities and Exchange Commission (SEC) commissioner Hester Peirce on Tuesday, who argued against crypto bailouts altogether.

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, in an interview with Forbes on June 21

She said,“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 awa.”.

On June 23 CZ stated that 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, in an interview with Bloomberg Business Week.

 He referred to his own company as an “organization” and his employees as “team members,” as part of this mission of decentralization.

Former Binance employees said that the company may not be as decentralized as claimed, stating that CZ has the sole authority over the company and its business decisions, though the publication cited comments from supposed anonymous.

A former employee told the publication “At the end of the day, he’s the holding company”.

To add a pinch of salt to the angle of the Bloomberg article, given that CZ has never explicitly stated that Binance was a decentralized company despite his advocacy for the concept. 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.

The management structure of Binance has also been brought into question as CZ has taken aim at poorly managed companies this week.