Binance has disclosed it has chipped in US$500 million for Elon Musk’s acquisition of Twitter, as bared by its controversial CEO Changpeng Zhao.
In an interview with CNBC’s Squawkbox, Zhao relayed his firm’s reasons for supporting the deal.
“Twitter is a free speech platform–which is global, which is extremely important. We want to support strong entrepreneurs–Elon Musk is a strong entrepreneur,” the 45-year old Chinese-Canadian executive said.
The chief of the world’s largest cryptocurrency exchange platform also said that the investment is a move to “make sure that crypto has a seat at the table when it comes to free speech.” On a more tactical reason, he also added that they “want to help bring Twitter into Web3 when they’re ready.”
Web3 is a notion for a new version of the World Wide Web that integrates decentralization, blockchain technologies, and token-based economy.
“We wanna help solve immediate problems like… charging for memberships. That can be done easily, globally using cryptocurrency as a means of payment,” Zhao explained.
According to sources who told The Verge, the new Twitter leadership is mulling a US$19.99 per month subscription model for its blue check mark feature, seemingly implementing a paid verification system. As of the moment, the optional subscription that unlocks premium features and lesser ads costs US$4.99 per month.
When asked about his thoughts on the other businesses and outside pressure that might affect Musk’s management of Twitter, Zhao said that “if anyone can take pressure, [he thinks] Elon Musk [showed] that he can handle pressure.”
“As an entrepreneur, we understand [handling pressure] very well. So, we fully support him in whatever he [does],” Zhao added.
While the takeover deal has been reportedly closed, it faces further scrutiny as Biden administration officials are debating whether the US government should submit any of Musk’s deals to national security investigations, including the sale for Twitter and SpaceX’s Starlink satellite network.
A suggestion was floated to use the law governing the Committee on Foreign Investment (CFIUS) in the United States to evaluate Musk’s transactions and businesses for national security implications. The interagency panel reviews acquisitions of US businesses by foreign buyers.
Should it be the case, one Musk deal that could be subjected to this is the Twitter takeover deal. The billionaire’s consortium in acquiring the social media platform includes foreign investors like Prince Alwaleed bin Talal of Saudi Arabia, Chinese native-run Binance Holdings Ltd., and Qatar’s sovereign wealth fund.
Binance is also not without its own legal skirmishes. Early in June 2022, the SEC reportedly opened an investigation into the early origins of the firm’s BNB token (previously the Binance Coin), determining if the exchange should have classified the initial 2017 coin offering as a security. At the same time, the company was also sued by an American investor for advertising TerraUSD as “safe” given its dollar peg following the stablecoin’s downfall in May 2022.
Reuters also reported in September 2022 that it was recently able to review a December 2020 written request from US Justice Department’s money laundering section that asked Binance to hand over records about its anti-money laundering checks and communications involving Zhao.
The two businessmen had a momentary clash back in November 2021 related to Musk’s then dogecoin push. Back then, the technological configuration of a DOGE wallet on Binance was different from that of other digital assets, causing problems for users withdrawing Dogecoin.
Binance then collaborated with the Dogecoin creators. However, in order to resolve this issue, they needed to entirely rebuild the wallet, which resulted in a week-long network delay.
Information for this briefing was found via CNBC and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.