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Crypto correction creating 'opportunity in the market,' Binance CEO says

Binance CEO Changpeng Zhao joins Yahoo Finance Live to discuss the bear market in crypto, buying opportunities, as well as the outlook for bitcoin and other cryptocurrencies.

Video transcript

BRAD SMITH: Everyone, we're going to switch gears for a hot second here as we take a brief look here at the crypto markets-- Binance, Bitcoin, you've got to look at that on your screen. And volatility has reared its ugly head once again seriously impacting the value of many crypto firms. This leaves us wondering when and if someone will be there to bail out any sinking projects.

For more, let's welcome in Changpeng Zhao, who is the Binance CEO, as well as Yahoo Finance's David Hollerith. CZ-- hope I can call you CZ-- thanks so much for joining us here today. First and foremost, just help us break down what you're seeing in the crypto landscape-- the washing out that we've discussed here-- and when some of that within this crypto winter will start to settle, you believe.

CHANGPENG ZHAO: Yeah. So we're definitely seeing some a correction, or a downturn, or bear market, however you call it. Different people have different terms for it. So yeah, we dropped from the all-time high from $68K per Bitcoin to 20-something-- $21K per Bitcoin right now.

And we're seeing that a number of firms are insolvent and a number of projects have gone under. But it's a small number in the grand scheme of things. So markets do go in cycles, even stock markets-- especially stock markets-- go in cycles as well. So we actually see a lot of opportunity in the market.

So we're increasing our hiring, increasing our M&A activities. We're looking at lowering fees on our platforms so that we make it easier for our users during this period.

DAVID HOLLERITH: CZ, David Hollerith here. Thanks for coming on the show. You know, Sam Bankman-Fried, the Founder and CEO of FTX, has sort of come out right now, notably, for bailing out some of these crypto firms that have run into trouble. I follow your Twitter and I know you're extensively keeping track of firms that are pausing withdrawals. And I was sort of curious what you've thought of Sam Bankman-Fried's efforts to bail out firms and whether or not Binance would ever be in a position where they might also bail out a crypto firm if they run into trouble.

CHANGPENG ZHAO: Sure. I mean, we definitely are looking at those similar things. But I want to clarify that bailout, again, is an overloaded word. I don't think anyone's doing, like, blanket-- any company that fails, we're going to bail them out. There's many bad projects in the space.

So we do look at stressed assets, companies that are insolvent, and we would like to help them either with loans, minority investments, or even M&A-- majority acquisitions. So all of those things are on the table. But I think all of us are looking at all the deals that's available in the market. And today, almost all of those deals do come to us. So yeah, we are very active in that space.

JULIE HYMAN: CZ, it's Julie here. I can only imagine the pitches that you are getting from various companies that need help, either from loans or trying to sell themselves to you. So everything's on the table there and you're getting all of those pitches. Can you give us-- are you close to doing any kind of action? I mean, as David just mentioned, we've seen Sam Bankman-Fried jump in and do some of these actions. Are you close to doing so? Are you making any loans? Are you making any buys in the coming weeks?

CHANGPENG ZHAO: We have done-- we have done quite a few already. The smaller ones we typically don't announce. We respect the privacy aspects of it. The larger ones we do tend to announce.

And also the BlockFi deal, I think, was on the table, even, like, a few months back. But we are definitely looking at all of that. Just because somebody makes news doesn't mean that-- or just because somebody doesn't make news doesn't mean there are no deals going on. We're looking at 50 to 100 deals.

DAVID HOLLERITH: CZ, just to follow up on that-- I understand the clarity of whether or not you want it to be public about doing bailouts. I think some people in the market interpret it as a way to sort of give confidence back to investors. So I am just sort of curious maybe your thought process on why you've not been as public about helping out potential projects that have run into trouble.

CHANGPENG ZHAO: So we don't like to advertise-- if the project can recover on their own just by taking a loan or taking a minority investment, et cetera, we don't need to attach our names onto them. We would actually-- they may or may not want to advertise that they're close on bankruptcy, et cetera. So we don't need to announce those deals.

Everybody knows we have the largest cash reserves in the industry. We just launched the Christina Rinaudo deal yesterday. That's a multi-hundred million dollar, multi-year deal. So we have the cash reserves. Everyone already knows that in this industry. They are talking to us.

BRAD SMITH: While we have you-- just with the number of companies right now that are showing that they have a liquidity issue when their projects are attempting to hurt-- or at least the owners of the cryptocurrency are attempting to withdraw funds, what do you believe in a regulatory front should come for the amount of liquidity that is necessary for these crypto projects to hold?

CHANGPENG ZHAO: Sure. I think there should be clear regulatory guidelines on reserves for different types of businesses in the crypto space. Today, I don't think there's such clear guidelines today in most countries. And also, there should be also requirements for transparency and disclosure.

We have seen certain projects when they're under stress, they stop communicating, which is really bad. Especially if you're under stress, you've got to communicate more frequently with users. So that's something we try to push the industry players to do. But more regulatory guidelines in this area would definitely help.