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June 23, 2022

Failed Cryptocurrency Projects Will Not Be Rescued by Binance

After FTX lent a helping hand to struggling crypto lenders BlockFi and Voyager, there have been whispers that Binance, with its huge cash reserves, may announce some rescues as well. That’s all changed thanks to Binance, who’s finally spoken up.

Companies are not encouraged to sponsor “poor” or failing crypto initiatives, according to the firm’s statement. If a project is badly developed, managed, or run, it falls under this category. According to a recent blog post by Binance, such enterprises should not be protected or given bailouts.

“Bad businesses should not be sustained. Let them fail and move on to the next person. If you don’t interfere, it will be replaced by better ones. During the current market downturn, several crypto lending organizations were forced to liquidate because of their significant overleverage.

But Binance reveals another kind of ventures seeking a rescue. This is a list of Binance-listed projects that have made minor errors of judgment. Binance explains these project types:

Spending too much money, not having enough money in reserve, or having other small issues may be fixed. Product-market fit, producing income under normal market circumstances, effective business models and respectable teams are some of the characteristics of these initiatives.

These can be rescued and the underlying issues that lead to their current predicament may be remedied.

The crypto-friendly SEC Commissioner declared her opposition to FTX’s $250 million liquidity injection to save BlockFi shortly after the announcement. It’s a natural process to separate the strong firms from the weak, she remarked. Allow the process to unfold organically. Peirce said the following in an interview with Forbes:

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In crypto, there is no way to get out of a jam. Nobody wants me to come in and declare that we’re going to find out a method to save you if we lack the power to do so. If we did, “I would not want to use that power, we really need to let these things play out,” despite the fact that we could.

Also, according to crypto parent Hester Peirce, the slump might serve as a useful teaching tool for both market players and authorities.