(Nov 24): Crypto billionaire Changpeng “CZ” Zhao further outlined his plans to backstop the stricken industry, pledging to amass at least US$1 billion for buying distressed assets and saying his Binance Holdings Ltd will make another bid for bankrupt lender Voyager Digital.
In an interview Thursday with Bloomberg Television’s Haslinda Amin, Zhao provided the most detailed overview yet of the various deals Binance is examining in the wake of rival FTX’s messy collapse. The centerpiece of Zhao’s plan is gathering partners for a fund aimed at backing promising but cash-strapped crypto projects.
“We are going with a loose approach where different industry players will contribute as they wish,” he said. Zhao added that he’ll soon publish a blog post providing more detail about the fund.
Zhao said he’s seeking to limit damage to the crypto sector from FTX’s implosion — an event the Binance chief himself helped accelerate with a Nov 6 tweet about plans to sell a US$530 million holding of FTX’s native digital token. Before his empire fell, FTX founder Sam Bankman-Fried had agreed to several deals that are now in limbo, including the purchase of Voyager.
The Binance leader’s credibility as industry savior is a topic of controversy because of his role in FTX’s undoing, as well as investigations into the company from Singapore to the US. Members of UK Parliament have asked Binance to explain the circumstances surrounding Zhao’s Nov 6 tweet, and whether the company understood the potential impact it might have.
Another source of tension is that while Binance has licences in many different jurisdictions, it isn’t formally based anywhere. When asked about the matter in the Bloomberg interview, Zhao demurred, saying only that Dubai and Paris are now its “global hubs.”
This year’s deep crypto rout has lopped about US$80 billion off Zhao’s personal fortune, but at US$15 billion it still far exceeds that of anyone else in crypto, according to the Bloomberg Billionaires Index.
Zhao said Binance US is planning to revive its bid for the assets of Voyager, a deal which came back into focus after FTX filed itself for bankruptcy. Binance will be competing with crypto exchange CrossTower Inc. and other companies for Voyager.
Binance is also in talks with Genesis Global, the US-based cryptocurrency broker which is seeking emergency funding to stay afloat, Zhao said. The troubled brokerage has US$2.8 billion in outstanding loans on its balance sheet, with about 30% of its lending made to related parties including its parent company, Barry Silbert’s Digital Currency Group.
Zhao said a Genesis collapse might only impact some large institutional players and sought to downplay the potential damage to the industry as a whole.
“There will be pain whenever one player goes down,” he said.
Dubai, Paris ‘hubs’
The crypto billionaire, who moved to Dubai last year, has been expanding his company’s presence in Europe and the Middle East. “Today we have the largest offices in Dubai and Paris so you can view those two as global hubs,” Zhao said, declining to disclose where the company was headquartered.
With FTX now in bankruptcy, Zhao’s interactions with his former competitor is coming full circle. Binance initially agreed to buy FTX as it started crumbling, then pulled out after Zhao relized what a precarious state Bankman-Fried’s exchange was in.
Binance did not have access to all of FTX’s books or trading history and could not trust the information it provided, Zhao said in the interview. The exchange is now planning to look at FTX’s assets as they come through bankruptcy proceedings, he said.
“They invested in a number of different projects, some of them are OK, some of them are bad but I think there are certain assets that are salvageable,” Zhao said.