The blockchain industry shrugged off the craziness of the 2020 pandemic, with many companies thriving in the “remote” working environments brought about by COVID-19.
Almost $700 million in mergers and acquisitions took place in 2020 across 83 transactions. That’s the largest number ever and a sizeable increase from the previous record of 69 M&A transactions in 2018. The majority of activity last year was within the industry itself, consolidating the sector with minimal engagement from external companies.
More than 90% of the $691 million reported was comprised of the top three acquisitions by Binance ($400 million), FTX ($150 million) and Coinbase ($90 million).
Binance’s purchase of CoinMarketCap at the end of March 2020 for a reported $400 million equaled the largest blockchain acquisitions of all time, rivaled only by Circle’s purchase of Poloniex and NXMH’s purchase of Bitstamp, both for $400 million, in 2018.
The leading exchange by volume received sharp criticism over the purchase, as it appears to represent a conflict of interest given that CoinMarketCap is a data and analytics company that provides comparative data about crypto exchanges, including Binance.
Jack Purdy, an analyst for Messari, told Cointelegraph that the takeover sets a negative precedent for the industry, no matter how well either company behaves. “It does represent a fundamental conflict of interest that has negative externalities for the space,” he said. “It’s like if Joe’s Pizza came out with the top 10 pizza slices in New York and everyone that uses that list happens to be those least informed to make the decision on where to go.”
“Even though Binance/CMC can be completely well-intentioned, it’s impossible for ratings not to be influenced by the underlying bias of the creators. If there are objective weightings to a system that would hurt Binance’s standing, it’s more likely than not that it won’t be implemented.”
Binance has claimed that both companies are individual entities and there is no bias from CMC. Despite the early criticism, it appears that sentiment toward the acquisition has softened in more recent months. In October 2020, FTX CEO Sam Bankman-Fried voiced his opinion on Twitter that Binance was actually a lifesaver for CoinMarketCap:
“Pretty much the day Binance bought CMC, it started getting better — a lot better. It has a lot of catching up to do, but the product has gone from hopelessly f—ed to competitive.”
This wasn’t the only activity by the leading exchange, with Binance acquiring multiple other companies throughout 2019 and 2020, including crypto debit card provider Swipe for an undisclosed sum. Similar to CoinMarketCap, Swipe chief operating officer John Khenneth also stated that “The deal was structured where Swipe is able to run the company independently from Binance.”
Other Binance acquisitions include Korea-based stablecoin company BxB, decentralized app information platform DappReview and Indian crypto…