Zhao Changpeng, the CEO of popular crypto exchange Binance, said that the initial coin offering (ICO) model is preferred to venture capital – even with the risk of fraud.
It's a notable statement, considering Binance's position as one of the world's largest crypto exchanges. Nor is it perhaps surprising, given its 2017 token sale as well as the exchange's recent spat with U.S. VC firm Sequoia. As reported previously by CoinDesk, Zhao was sued by Sequoia in Hong Kong for allegedly speaking to other investors while in talks about a possible capital injection to the firm.
In the blog post, Zhao argued that "a vast majority of 'professional VCs' have no clue about the projects or field they invest in."
"Many of them have zero startup experience and don’t even have a basic understanding of the technologies involved their fields," Zhao went on to write. And despite admitting ICOs result in failure or outright fraud, Zhao still believes that "compared to 'traditional VC invested projects,' a larger ratio of ICO projects will succeed."
What's more, he argued that most of those putting their money in such tokens are aware that they may not succeed in the long run.
"Most ICOs are new startup projects, and have a high rate of failure, just like in traditional startups. This is nothing new. Most ICO investors already know this. ICO investors are early adopters (and learners)," later concluding:
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.