The head of Binance’s venture incubator, Ella Zhang told Bloomberg in a recent interview that a burst of the ICO “bubble” would be a positive development for the industry.
“We’d like the bubble to break,” said Zhang, who joined the world’s second-largest cryptocurrency exchange less than two months ago. “We still see a lot of hype in the market, valuations are high and unreasonable. We really think if the bubble bursts, it’s a good thing for the industry.”
As head of Binance Labs, Zhang is in charge of investing $1 billion in blockchain-related projects. However, she is not too keen on the current market conditions. Zhang told Bloomberg that while the bull market was positive because it attracted more people, the truly valuable project would emerge only in the case of an ICO bubble burst.
ICOs or initial coin offerings are a controversial fundraising mechanism that allows start-up to issue and sell their own crypto tokens. While this method allows provides an easy way for promising blockchain projects to raise capital, it is often abused by unscrupulous actors that have no intentions to deliver on their promises. Last year, China and South Korea imposed bans on domestic ICOs.
As part of her role at Binance, Zhang is also helping the company’s efforts to tackle ICO scams. She revealed has something called Cryptocurrency Governance Initiatives, or CGI, which is aimed at fighting “scams and sh*t coins, and to boost crypto and blockchain technology”. She also said that Binance would encourage funds and token teams it’s working with to join the initiative, adding that fund managers would have to vow "they won’t participate in pump and dump" schemes and projects would have to build what they pledged in their white papers.
Binance Labs plans to invest $1 billion of Binance’s profits in various blockchain projects in three to five years. The company’s strategy will focus on companies utilising blockchain technology to solve problems, with the average investment ranging between $1 million and $10 million.