“Bad” crypto projects shouldn’t be saved, says Binance founder CZ

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 companies that have operated poorly, managed poorly, or launched poorly designed products should not receive bailouts — and should instead be left to collapse:

“In short, they’re just ‘bad’ projects. These should not be saved. Unfortunately, some of these “bad” projects have large numbers of users, often acquired through over-incentivization, “creative marketing, or pure Ponzi schemes.”

“In addition, there are always more failed projects than successful ones in every industry. Hopefully the failures are small and the successes are big. But you get the idea. Bailouts don’t make sense here,” 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 facing recent liquidity issues like Voyager Digital with a revolving loan of 350 million USD coin (USDC) and 15,250 BTC, which is worth of 15,250 BTC has $464.48 million at the time of writing.

However, CZ went on to say that Binance may seek to back some cash-light firms that are either “struggling but fixable” or “barely surviving but have great potential.”

“We have received many projects that want to get involved and entertain. Even in real life, these categories are not unique designations. All projects consider themselves a third category and we need to look at each project in detail to make a decision. It has a certain subjectivity,” he said.

A number of companies are struggling with liquidity from the current bear market, while others are reeling from exposure to potentially bankrupt companies and projects such as Three Arrows Capital and Celsius.

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Binance CEO comments echo similar views from SEC Commissioner Hester Peirce on Tuesday, who opposed crypto bailouts overall.

In an interview with Forbes on June 21, the crypto-friendly commissioner known as “Crypto Mom” ​​argued that it’s better “to let these things play out” to create a more sustainable industry than to bail out struggling companies.

“When things are a bit tougher in the market place, you realize who’s actually building something that could last over the long term and what’s going away,” she said.

Centralized Binance

On June 23, CZ explained in an interview with Bloomberg Business Week that his company’s mission is to support autonomous blockchain-based projects that can operate without a central authority or leader, unlike the traditional centralized model.

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

However, the publication cited comments from allegedly anonymous former Binance employees saying that the company may not be as decentralized as claimed and that CZ has sole authority over the company and its business decisions.

“Ultimately, he’s the holding company,” a former contributor told the publication.

The Bloomberg article’s point of view may require a pinch of salt, as CZ has never explicitly stated that Binance is a decentralized company, despite its endorsement of the concept. Despite claiming to be a decentralized ecosystem, the Binance Smart Chain has drawn legitimate criticism for a lack of one in the past.

While CZ has targeted poorly managed companies this week, Binance’s management structure has also been questioned.