You are right that stock markets are not doing very well. But crypto markets are doing even worse: The sector’s value fell by over 70 percent, and $2 trillion was pulverized. There have been some spectacular failures, such as the demise of the stablecoin terra. Has crypto, as a sector, behaved more recklessly than traditional finance? Is it a funhouse mirror version of finance?

I don’t think so. In any market, there are always failures. Failures are necessary to build the successes. Google wasn’t built in a day—there’s many failed search engines before Google. That’s how innovation progresses. We learn from this cycle. So the crypto industry is still growing.

Do you think that the crypto sector allowed failed projects to become too central to the crypto industry?

When we talk about the crypto industry, what is it?

How would you define it?

It’s no one—that is the beauty of decentralization.

Binance invested in terra; it backed the project, it allowed terra to be traded on its exchange. Then last month terra-luna was revealed as a poorly designed project; it failed, and over $40 billion was lost in a weekend. Let’s say you are the industry in this case—and other big crypto companies are the industry.

I think the industry doesn’t allow or not allow those projects. It is users, people who are involved in those projects—they were following and supporting those projects. And many people support many failed projects, like many people used to use MySpace, right? And also the industry itself is surviving: It’s like not like terra-luna is gonna kill the crypto industry.

Yes, but terra-luna possibly got a level of legitimacy that maybe another failed project didn’t get. So why did it get it? Was it because exchanges listed it? Was it because big investors were backing terra?

I don’t know. We could also speculate that there could have been a bigger failure than terra that didn’t happen. It’s possible to have a bigger failure that the industry prevented somehow. I don’t know if it prevented it. So could the industry collectively prevent terra-luna’s collapse? Possibly it could. Did we? No. But did we prevent something bigger? Probably yes.

What did you prevent?

I don’t know. You never know the disasters you prevent. If somebody stopped 9/11 and the airplanes never crashed—then the guy wouldn’t know how big of a problem he prevented.

I think the better analogy here is if you only stopped one plane, but the other went through …

The things we prevent, we don’t know how big they are.

Has the terra debacle changed how Binance chooses which coins to list on its exchange? Has there been any teachable moment here?

I think we have all learned from this type of incident. So we now look at lending and borrowing protocols much more closely. We look at the mechanisms, the risk controls, etcetera, much more closely.

What about listing terra on your exchange? Had not Binance and other exchanges listed it— maybe terra wouldn’t have become that prominent, and its fall would have affected fewer people.

It’s a chicken and egg problem, right? When a coin gets a large number of followers, the exchanges do have to list it.

I checked Binance’s listing requirements. It’s about the number of users, but it’s also about the quality of the team, and in general the business model. So did your checks of those things discover anything about the project? Because the project was criticized by many–even on podcasts like Bankless, which is usually pro-crypto in any possible way—there were many people saying “terra-luna can’t work.”

I know we did all the checks—we have done the postmortem. We did do all the checks. I believe our team did all the proper checks. But for any project, there’s always someone saying bad things about the projects, especially the popular project.

In this case, they were right, weren’t they?

For all the failed projects, all the other guys who criticize those projects would be right.

Going back to terra-luna: How do background checks for coins asked to be listed on Binance work right now?

So we use the standard industry background checks. We’ll look at the profiles; we do ask them for background checks through a background check service.

Are you going to scale that up in any way?

We can always improve. But again, I don’t think we can guarantee no problems in the future. Like, no regulators can guarantee there’s no failed products or projects, or companies on Nasdaq. So it’s not a black-and-white problem to solve. Right. But can we learn lessons? Absolutely. What are we doing specifically? Yeah, we’re doing more analysis, especially when lending liquidity is involved. But do we have a perfect solution to avoid it? I don’t think so. Whenever you have innovation, you should allow failures.

With terra, my beef is that simply by reading how it worked—the model to me sounded unworkable.

You should have written about that, right? You made a mistake there.

But I didn’t list it on my exchange.

But you didn’t protect your readers. We all share the same responsibility.

Let’s change the subject. Binance is doing well right now, isn’t it? Other exchanges are tightening their belts, but you are hiring people rather than laying them off.

Yes. We didn’t spend a lot of money during the bull market. We’ve been around for a bear market—this is at least the second cycle for Binance. We know that bitcoin’s price can drop by 80-90 percent. So I always told our team that we need to keep 10 years’ of cash reserves. That’s how we operate. Also we continue to grow. And we are also very confident that the industry is still growing, the number of users are still coming in. And in another two, three years, the price may catch up to the value again. But we want to be ready for the users that come in that want to use our products.

How do you see Binance emerging from this moment of industrywide crisis?

I think most likely there will be consolidation, which will work to our advantage and whoever else has cash laying around. So we will be doing more investments, acquisitions, and hires. In the long term, this might not be a bad thing for us. But at the same time, I think it doesn’t matter—the bear market: People are actually more focused on making better products. In a bull market, everyone’s trying to raise money; everyone’s trying to do their own project. There’s a lot of shiny, fluffy stuff going on. We’re seeing a bear market. I think we just hunker down hard, to build our product. And then when the next bull market comes, we will be ready

Do you think that Binance and other big actors that have a lot of cash reserves—do they have a kind of responsibility to bail out projects that pose an existential threat to the whole crypto sector? So if a terra times 10 happened, would Binance help prop it up in any way?

I’m glad you mentioned this. So I think there’s three points. The number one so far: The industry hasn’t been on a lot of large scale bailouts, but the industry is still fine. Terra-luna got 40 billion disappearing in a day—the industry is still here. A few other projects are impacted, but that’s a small number. So even without “bailouts,” the industry is fine.

On bailouts, there’s two scenarios. Most failed companies are mismanaged. They made some mistake or they were badly designed. Why would you bail out something like that, then?

You don’t want to bail out mismanaged projects that will continue to be mismanaged and make them bigger, and have a bigger problem down the road. So in theory, the bailout is for companies that were temporarily mismanaged. You can bail them out, they can improve, and they go on to better.

Would you bail out the latter category? The good ones?

Yes, absolutely.

Is there anyone that you’re thinking of right now?

We do get requests from almost any project that is under pressure, even projects that are not in immediate liquidation risk but may be feeling a little bit of pressure.

There is not one single “bailout” mechanism: We could acquire the entire product, lend them some money, make an investment and have some equity. We could buy some of the tokens to give them liquidity, or acquire them. All of those things are possible. But fundamentally, we look at each project on an individual merit basis, right? We still look at the product, user base, product team. So bailing out or not, it’s not black and white.

Would you bail out crypto lender Celsius? It has been under stress, what with suspending all its users’ withdrawals, but maybe it is a good project.

I don’t want to comment on Celsius specifically. I think their team is—there’s some discussions going on. We’re talking with every project in the industry.

You’re talking with Celsius?

I cannot even confirm that. But I would assume there’s a very high possibility.

What other projects keep you up at night, these days?

I sleep pretty well, usually.

What about tether? For a moment, after terra-luna’s collapse, many thought it would be the next stablecoin to go. It is a $78 billion project. And now its managers are complaining that they are under attack by speculators.

I don’t think about it. It doesn’t cause me to lose sleep.

Would you bail it out?

It depends on how solid it is.

Tether is pretty solid, no?

I’m not sure. I am not questioning it; I just don’t know. They don’t talk to us. We don’t have information about the project, the team, who’s running it … It’s a black box to us. So when the project wants us to bail them out, we need to do due diligence. Before we can decide. Right? So today we haven’t done that due diligence. Would we bail out Tesla? I don’t know.

I mean, don’t tell Elon Musk. You gave him $500 million to help him buy Twitter. How are those conversations going with Elon about Twitter?

I don’t talk too much about Twitter with him.

And about other things?

Not that often. We’re pretty busy people, right? He’s busy. I’m less busy—but I feel busy. No chitchat.