The founder and CEO of Binance Holdings Ltd., Zhao “CZ” Changpeng, said that the world’s largest digital asset exchange may spend more than $1 billion this year on acquisitions and investments, even though it looks like the crypto winter will last longer than expected.
So far this year, Binance has given $325 million to 67 projects. In 2021, they will give $140 million to 73 projects. That doesn’t include a possible investment of more than $200 million in the Forbes media company and $500 million in financing for Elon Musk’s on-again, off-again plan to buy Twitter Inc., which could take until next year, if it ever gets done.
Sam Bankman-Fried, another crypto billionaire, has been called the new John Pierpont Morgan because he buys assets from well-known troubled lenders and brokers like Voyager Digital Ltd. Zhao, on the other hand, has taken a more low-key approach by focusing on things like decentralized finance and nonfungible tokens. Binance also put in a bid for Voyager, but it hasn’t bought any troubled cryptocurrencies this year.
“We did look at a lot of lenders in recent months, because that’s where all the issues are,” Zhao said in an interview this week. “Many of them, they just take a user’s money and give it to somebody else. There’s not a lot of intrinsic value. In that case, what’s to acquire? We want to see real products that people use.”
In the meantime, Binance continues to deal with long-running industry issues such as software hacks and tightening regulation. Online pirates stole the equivalent of $568 million on Thursday by exploiting the exchange’s Binance Coin. Zhao took to social media to say the incident is now contained and told users that their funds are safe.
Zhao said that Binance has also been putting a lot of money into the ecosystem for non-fungible tokens (NFTs) and fan tokens, as well as into traditional payment service providers. Zhao said that Binance has made money even though the prices of most cryptocurrencies have dropped by more than 50% this year. He didn’t give more details.
“DeFi works,” Zhao said. “NFTs are a lot more than selling pictures of monkeys. NFT use cases have not largely been well built — NFTs for tickets, for university degrees. I think the technology will stay.”
“In the coming months, Binance might also be interested in acquiring minority stakes in traditional ecommerce and gaming companies”, he said.
He said that Binance has a $7 billion fund that has been investing in deals and a team of 30 or more people who work on mergers and acquisitions.
“Overall at a high level, during the bear market we’ll see more market consolidation,” Zhao said. “There’s a lot of risks and a lot of pain, but also a lot of opportunity.”
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