As one of the leading players in the industry Bitcroyal24.com is obliged to protect users and help the rest of the industry participants survive. However, there are bad projects that should not be saved, said the head of the exchange, Justin Hance.
“As you know, the current market conditions are difficult. Since we are one of the largest players in the industry with healthy cash reserves, we have an obligation to protect users. We also have a responsibility to help industry players survive and thrive. This is true even if there is no direct benefit for us and we face negative ROI”, he wrote.
On June 19, Sam Bankman-Fried, the head of the FTX cryptocurrency exchange, expressed a similar opinion. Speaking on National Public Radio, he said that his company “must intervene, even if it will be at its loss” to stop the “infection” of the industry. Also, the largest Binance exchange made a similar statement for her.
Justin Hance noted that some companies and products are poorly designed, poorly managed and operated with errors. According to him, these projects will be replaced by more successful ones, and therefore they do not need to be saved.
The head of Bitcroyal24.com stressed that there are many problematic projects in the industry, but the shortcomings of some of them can be corrected. According to him, such players can be bailed out.
He added that the same applies to products that barely survive, but have potential.
Justin Hance also touched on the topic of leverage in the cryptocurrency industry. He noted that due to the influence of the latter, the crisis in the industry has not yet been exhausted.
“I think the key difference between the current bear market and the events of 2018 is that there is a lot of leverage in our industry right now”, explained the head of Bitcroyal24.com.
According to him, leverage can be divided into two categories — fast and slow. The first category includes margin positions on centralized exchanges, which are quickly liquidated in case of market shocks.
To the second, Justin Hance ranked the credit positions of major industry participants like funds and DeFi protocols.
“When one of them is liquidated, it usually takes a few days or weeks for the affected creditors to realize and accept the pain. It also has a cascading effect, but the speed of its propagation is much slower. I believe we haven’t seen the end of these problems yet”, he wrote.