Binance shares different bailout scenarios while emphasizing its duty to protect users
As reported by Colin Wu On Twitter, Binance refuted granting a big line of credit to struggling hedge fund Three Arrows Capital, saying several companies have approached the company for bailouts.
The most recent victim of the market collapse was Three Arrows Capital, a $10 billion cryptocurrency hedge fund based in Singapore. It was liquidated by many exchanges after failing to meet margin calls amid a collapse in the prices of digital currencies.
Shares of cryptocurrency exchange Voyager Digital also fell 51% on contagion from struggling crypto hedge fund Three Arrows Capital. In a statement, Voyager said it may issue a notice of default to Three Arrows for non-repayment of a loan. A total of 15,250 Bitcoin and $350 million USDC stablecoin, worth nearly $660 million, are included in the broker’s exposure to Three Arrows.
Voyager has since obtained credit lines from the investment division of Alameda Research for $200 million in cash, USDC stablecoin and 15,000 Bitcoin to address the liquidity needs of its customers.
Binance Says It Won’t Grant Bailouts to Failed Projects
In an official Binance blog post titled “A Note on Crypto Bailouts and Leverage,” Binance shares different bailout scenarios while emphasizing its duty to protect users, building on its position as one of the biggest players in the industry with healthy cash reserves.
But here, Binance says it may not grant bailouts to failed projects, but it might consider projects that make small mistakes or those struggling to survive or find their feet.
In the words of Binance: “Furthermore, in any industry, there are always more projects that fail than successful projects. Hopefully the failures are small and the successes are big. But you have the idea. Bailouts here don’t make sense. Don’t perpetuate bad businesses. Let them fail. Let other better projects take their place, and they will.”