CZ Talks Down Bailouts Months After Putting Up A Bailout Fund
In a now-deleted tweet, Binance CEO Changpeng “CZ” Zhao warned followers about the dangers of bailouts, saying “once you do one bailout, you end up in a dilemma.”
His comment is a stark reversal from just in November when he said that Binance was “forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.”
Twitter user DeFiac asked CZ if this was his “thought process with FTX,” and the Binance chief was quick to defend his now-deleted remarks, denying that the FTX scenario was a bailout. “One business buying another one with their hard-earned money is not a bailout (as in printed money),” he said.
His remarks attempt to highlight crypto’s strength as three US banks shuttered in just the past week.
CZ has spent a good part of the past few months calling FUD on anything bad published about Binance following the FTX collapse and amid the government’s attempts to rein in the crypto industry.
Following the bailout tweet, CZ took a victory lap and announced that the remaining amount in the Industry Recovery Initiative funds will be converted from stablecoin to native crypto.
It might be too early for that lap, though. A recent report from the Wall Street Journal revealed that Binance reportedly devised a strategy to escape prosecution by regulatory authorities when it established its US entity in 2019, according to internal messages and documents from 2018 to 2020 and interviews with former employees. If US regulators conclude that Binance has control over its US entity, they may assert authority over Binance’s whole business.
Information for this briefing was found via Twitter, Reuters, Coin Desk, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.