Changpeng Zhao: 50+ Companies Asking Binance for Bailouts

Binance CEO Changpeng Zhao said Friday he was privately speaking with more than four dozen crypto companies that had asked him for financial assistance.

“We don’t want to bail out companies that are mismanaged,” Zhao said in an interview with Blockworks. “We do want to help the majority of the companies that have a little bit of a liquidity crunch to go through this cycle. We’re talking to 50-plus of them.”

However, he added, “Not all projects are worth saving.”

The revelation came two days after FTX founder Sam Bankman-Fried said in an interview that “some third-tier exchanges” were “already secretly insolvent.” Bankman-Fried’s company closed a deal with the crypto lender BlockFi on Friday that included a $400 million credit line to assist BlockFi with financing its customer withdrawals. The company began struggling last month after taking a roughly $80 million loss on a loan to Three Arrows Capital, an investment firm ordered into bankruptcy on Tuesday.

Zhao also implied that BlockFi asked him for a loan before going to FTX. “The same deals that you see on the news, they typically come to us first,” Zhao said. “I’m pretty confident that we have by far the largest cash reserve right now.”

The BlockFi deal provided FTX with an option to purchase the company at a price of up to $240 million, but was reportedly the only lender that would not have not required BlockFi to confiscate client assets if it became insolvent.

Voyager on Friday became the fourth exchange in a month to freeze customer assets. “This was a tremendously difficult decision,” CEO Stephen Ehrlich said in an afternoon press release. “But we believe it is the right one given current market conditions.”

Other companies that have indefinitely seized customer assets include Celsius (June 12), CoinFLEX (June 22), and Babel Finance (June 17).