By God, that’s CZ’s music!
The Binance mogul and newly minted main character of crypto has struck again, this time by purchasing bankrupt crypto lender Voyager’s assets for $1.022 billion. (Note: Binance is actually only paying $20 million for Voyager with the rest of the money being used to make Voyager customers whole).
As you might recall, Voyager was bought out by FTX in September for $1.4 billion, beating out an offer from Binance in the process. We don’t think we need to remind you why that deal is no longer any good.
Binance has multiple motives behind doing this deal.
- For one, it opens them up to a wave of potential new customers. When FTX acquired Voyager, all of Voyager’s customers would have the option of starting trading accounts on FTX. This aspect found its way into the Binance deal as well.
- Another potential motive would be to display strength. As we covered last week, there is a lot of uncertainty over Binance’s financial health right now. And, until recently, there hasn’t been much from Binance to assuage those fears. The auditing firm Mazars Group, who recently performed a proof-of-reserves assessment for Binance, abruptly announced that it is pausing all work with crypto companies. That doesn’t exactly inspire confidence that Binance’s proof-of-reserves is as sturdy as Binance wants you to believe. Thus, a big acquisition like this could be a move to show that Binance is financially strong.
- Finally, it is possible that CZ has caught the philanthropic bug. There’s a possibility that CZ truly wants to help Voyager’s customers get their money back. Effective altruism, if you will.
Unfortunately, as FTX taught us, expensive acquisitions don’t automatically equate to financial health.
Thus, our position from last week is unchanged:
“Look, we don’t know for sure what’s going on with Binance. It’s possible that everything turns out fine, and we look back on this laughing. But for whatever it’s worth, many people are beginning to lose faith in the exchange. And as history has shown us time and again, a rush of withdrawals and distrust is never a good sign.”
In the end, we really hope this works out for Voyager’s customers. And we really hope that all of the clamors around Binance right now are nothing more than FUD. But for now, or at least until there’s more transparency, we suggest getting off Binance as quickly as possible.