thecoinrise.com
Changpeng Zhao, the Chief Executive Officer of the Binance cryptocurrency exchange has weighed in on the continuous move by troubled crypto platforms to seek bailouts from those with adequate liquidity positions. The vocal CEO, known on social media as ‘CZ’ said bailouts is not necessarily bad, but that if not properly watched, can be a way to finance a project that has very bad fundamentals.
CZ said that the idea of a bailout can mean several things in a lot of situations. He believes that there are some protocols in search of bailouts that have poor designs without a product-market fit. Besides, he noted that some are equally poorly operated and managed, leading to the fast slide into the difficult situation they find themselves in.
Changpeng Zhao said every industry has more projects billed to fail than succeed, and in this scenario, coming to the aid of such platforms will not help the industry in the long run.
“..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. Don’t perpetuate bad companies. Let them fail. Let other better projects take their place, and they will,” he said.
Binance and Acquisitions
The Binance CEO said there are a number of troubled projects that have approached Binance exchange for a bailout. He said many of these projects claim to have the right fundamentals but are just cash-strapped to continue operating optimally given the current market conditions.
While CZ did not discount the possibilities of helping the firms in this category, he said the exchange’s deals team will review each company and determine the merits of how they should be helped.
The broader digital currency ecosystem is billed to face a very long contraction period, and many platforms are already feeling the impacts.
From the FTX’s $250 million loan bailout of BlockFi to the $100 million acquired from Alameda Ventures by Voyager Digital Holdings, fast bailouts is increasingly becoming the best avenue to reposition in a bid to survive this current market onslaught.