Binance’s purchase of CoinMarketCap.com raises eyebrows

Zhao Changpeng Photographer: Akio Kon/Bloomberg

Binance Holdings Ltd., one of the world’s largest cryptocurrency-trading platforms, acquired CoinMarketCap.com, arguably the most popular website among individual investors for tracking coin prices.

Terms of the agreement weren’t disclosed. In an interview with Bloomberg News, Binance Chief Executive Officer Zhao “CZ” Changpeng said that “CoinMarketCap.com is extremely valuable because they are the landing page of crypto.”

The site has been the world’s 570th most-trafficked over the last three months, according to data tracker Alexa. It also provides rankings of exchanges and coins. While Zhao said CoinMarketCap.com will be run separately from the rest of Binance and remain neutral, industry participants said the acquisition could present potential conflicts of interest.

“Binance could establish themselves as the preferred exchange, defaulting themselves into being the top exchange in the rankings, or use CMC as a funnel to obtain new users,” said Nic Carter, co-founder of competing tracking site Coin Metrics. “While the move may cause some to question CMC’s ability to remain a neutral data provider, it could potentially be very productive for Binance.”

Binance recently raised users’ ire when it, along with several other exchanges, used its customers’ coins without authorization. The exchange later reversed that decision.

On the other hand, Binance could potentially help CoinMarketCap.com improve its data reporting, which has been widely criticized. In a filing to the Securities and Exchange Commission last year, Bitwise Asset Management said that 95% of trading volume reported on the site is fake or non-economical in nature.

The main reason for that is that the various exchanges the site tracks are providing it with fake data in the hopes of being ranked higher: A higher-ranked exchange gets more referral traffic from CoinMarketCap.com. The site has been working on ways to weed that false data out already, and Binance will boost these efforts further, Zhao said.

“It’s not an easy problem to fix, to be honest,” he said. “Most everything requires some kind of judgment or algorithm.”

CoinMarketCap.com was started by Brandon Chez in 2013, and he’s run it out of his home on New York’s Long Island. The company has grown to about 30 people working from home. The deal came together in the last three-four months, Zhao said. Chez will leave his post, but stay on as an adviser.

Market tracker TokenAnalyst estimates CoinMarketCap.com is worth at least $30 million, based on its advertising revenue.

A crypto-industry website, the Block said earlier this week that Binance may pay as much as $400 million in cash and stock. Because it’s such a well-known property, that figure “doesn’t sound unreasonable,” said Aaron Brown, a crypto investor and a writer for Bloomberg Prophets.

Binance is making the acquisition just as much of the world retrenches because of the coronavirus outbreak. Thanks to recent market volatility, however, most exchanges’ revenues have seen a boost. Binance’s website traffic has increased about five times over the past few weeks, Zhao said.

“It could be that people are more interested in crypto, it could be people are just more bored at home and trading crypto just to pass time,” Zhao said.

Bloomberg

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.