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The past two weeks have been a difficult time for the global crypto market. Many crypto projects were impacted and the total market capitalization slipped below the $1 trillion mark. Some affected crypto projects are now seeking bailouts and Binance intends to help out those that are worth saving.
CZ Outlines Criteria for Bailouts
In a Thursday article, Changpeng Zhao (CZ), founder and CEO of Binance, noted that many crypto projects, which he categorized into three groups, have contacted his company for rescue.
The first category, according to the Binance CEO, consists of companies that are “poorly designed, poorly managed, and poorly operated. ” Even though some of these projects have a large userbase, CZ said that his company will not rescue them because they are “bad.”
“Bailouts here don’t make sense. Don’t perpetuate bad companies. Let them fail. Let other better projects take their place, and they will,” Zhao said.
The second category includes projects with decent attributes such as a detailed business plan, the ability to raise funds when the crypto market is fairly stable, and a dedicated workforce.
However, companies under this category have some deficiencies like engagement in large spending or any other kind of small issues. Zhao said that such companies can be rescued, after which they learn from their mistakes and avoid repeating them in the future.
The final category consists of crypto projects that have good business models but low funds to push their growth. Such companies, he said, usually fall to fund rounds, mergers & acquisitions (M&A), and other means of fund generation to get back on their feet.
While many projects claim to fall under the third category, CZ noted that Binance will always check each company before deciding whether to rescue them or not.
“[The three outlined] 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.
Binance Flexes Healthy War Chest
Earlier this month, CZ noted that his company is increasing workers and engaging in more M&A activities, defying the crypto winter norm. The reason for this, he mentioned, was the “healthy war chest” his company had.
Having experienced bear markets in the past, CZ stated that Binance had garnered enough reserve to scale through the crypto winter.
Meanwhile, the exchange just announced an exclusive deal with legendary footballer Cristiano Ronaldo to promote NFT adoption.