As one of the leading players in the industry, Binance has a “mission” to protect users and help the rest of the industry survive. However, the head of the exchange, Changpeng Zhao, said there were “bad projects” that should not be saved.

“As you know, the current market conditions are challenging. As we are one of the biggest players in the industry with healthy cash reserves, we have a duty to protect users. We also have an obligation to help players in the industry survive and thrive. This is true even if it does not directly benefit us and we are faced with negativity. return on investment“, He wrote.

On June 19, a similar opinion was expressed by Sam Bankman-Fried, head of the FTX cryptocurrency exchange. In a speech to National Public Radio, he said his company “must intervene” to stop the “contagion” of the industry “even to the detriment”.

Zhao noted that some companies and products were poorly designed, mismanaged and abused. According to him, these projects will be replaced by more successful ones, so there is no need to save them.

“In short, these are just ‘bad’ projects. They should not be saved. Unfortunately, some of them have large numbers of users, partially acquired through inflated “creative” marketing incentives or pure Ponzi schemes,” he added.

Earlier, Hester Pierce, Commissioner of the US Securities and Exchange Commission, said that participants in the cryptocurrency industry should not support projects that find themselves in distress due to adverse market phenomena. He explained that this only hurt the industry.

According to Zhao, education is the best protection for users. He believes that industry participants and government organizations should launch initiatives aimed at improving the financial literacy of the population.

The Binance president emphasized that there are many problematic projects in the industry, but some of the shortcomings can be eliminated. According to him, such players can be “bailed.”

He added that the same goes for products that “barely survive but have potential.”

Zhao also touched on the issue of leverage in the cryptocurrency industry. He noted that due to the effect of the last crisis in the sector, it has not been exhausted yet.

“I believe the main difference between the current bear market and 2018 events is that there is a lot of leverage in our industry right now,” the Binance head said.

According to him, leverage can be divided into two categories – fast and slow. The first includes margin positions on centralized exchanges that are quickly liquidated in the event of market shocks.

Second, Zhao listed the loan positions of major industry participants such as funds and DeFi protocols.

“When someone goes into liquidation, it often takes days or weeks for affected creditors to recognize and accept the pain. It also has a cascading effect, but the propagation speed is much slower. I believe we have not yet seen the end of these problems,” he wrote.

Recall that in June 2022, Zhao said that the crypto winter is the right time to hire new employees and further develop the business through various acquisitions.

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