Changpeng Zhao, the CEO of the Binance exchange recently stated that his company is ready to bail out sinking crypto companies with good products and good teams. Although Binance is open to acquisitions and strategic partnerships, the company will set a high standard for its business deals.
Earlier this week, Sam Bankman-Fried, the CEO of FTX exchange stated that his company still had about $2 billion cash available for bailouts. FTX recently struck a deal to acquire BlockFi, a crypto company that faced liquidity issues in the past few months.
Alameda Research, a company founded by Bankman-Fried also handed a line of credit to Voyager Digital whilst the company went down. Paradoxically, it was later discovered that Alameda Research was one of the debtors on Voyagers books.
While Alameda handed invested $500 million in Voyager, the company took a $376 million loan from Voyager. This deal imbibed many questions in the minds of onlookers, including Binance’s CZ.
CZ and Binance Willing to Take Lesser Risks than Bankman-Fried’s FTX
CZ noted that while his company is open to investing in and bailing out multiple projects, he would not strike a complicated deal like that of Alameda and FTX. Shortly after FTX handed a line of credit to BlockFi, CZ published a blog post that constituted a tactful warning. He discouraged his audience from supporting bad companies. “Let them fail, let other projects take their place”, he added.
Binance will be tactfully spending its funds on acquisitions. The company refers to straightforward deals to the sort offered by Alameda to Voyager. When quizzed about his take on the Alameda deal, Changpeng Zhao stated:
“That was surprising even to me, to be honest. I try not to comment on our competitors or industry peers. But I would never do that type of deal. I would never say, ‘I will invest in your company and then you loan me some money.’ I would just not invest in that company, I’ll keep my money.”
About a month ago, CZ also praised his company for utilizing its resources efficiently. Changpeng Zhao emphasized that while many other crypto institutions were in trouble for funds mismanagement, Binance has thrived amidst the crypto winter. Binance will continue to discretely spend its resources while bailing out crypto projects.
