The blockchain industry has been aware of the madness of the 2020 pandemic, as many companies have thrived in the “remote” business environment caused by COVID-19.
In 2020, there have been 83 mergers and acquisitions worth approximately $ 700 million. This is the largest increase on record compared to the previous record of 69 M&A agreements in 2018. Most of the activity during the past year was related to the industry itself, which boosted the sector with the least amount of outside participation.
More than 90% of the estimated $ 691 million was the three largest acquisitions: Binance ($ 400 million), FTX ($ 150 million), and Coinbase ($ 90 million).
Binance’s $ 400 million acquisition of CoinMarketCap at the end of March 2020 corresponds to the largest blockchain acquisitions ever, competing only with the acquisition of Poloniex Circle and the acquisition of Bitstamp NXMH for $ 400 million in 2018.
The largest exchange has come under fire for the purchase, as there appears to be a conflict of interest as CoinMarketCap is a data and analysis company that provides comparative data on cryptocurrencies, including Binance.
Messari analyst Jacques Purdy told Cointelegraph that the acquisition sets a negative precedent for the industry, no matter how well the company behaves. “This is, in fact, a fundamental conflict of interest that has negative external consequences for space,” he said. “It’s almost as though Joe’s Pizza came with the 10 best slices of pizza in New York, and everyone who uses the menu is less knowledgeable about where to go.”
“Although Binance / CMC can be fully marketed, ratings can only be affected by creative errors. If the system has objective weights that might harm Binance’s reputation, it will likely not be implemented.”
Binance claims that both companies are separate entities and that CMC is not discriminatory. Despite early criticism, takeover sentiment appears to have eased in recent months. In October 2020, FTX CEO Sam Bankman-Fried tweeted his opinion that Binance had already started on CoinMarketCap:
“Around the day Binance bought CMC, things started to improve – much better. It has a lot to compensate for, but the product has been hopelessly ruined to a competing product.”
This wasn’t the only activity of the leading stock exchange: Binance acquired several other companies during 2019 and 2020, including the debit card provider Swipe of an unknown amount. As with CoinMarketCap, John Hennett, Director of Operations, stated, “The agreement is structured so that Swipe can operate the company independently of Binance.”
Other acquisitions by Binance include the Korean firm BxB, the decentralized application information platform DappReview, and the Indian cryptocurrency exchange WazirX.
At a recent press conference, Binance founder and CEO Changpeng Zhou indicated that the company will acquire 20 to 30 more companies by 2021, cementing its position in the crypto sector.
Cryptocurrency exchange FTX, which only launched in 2019, became the only company to acquire nine numbers in 2020, acquiring the portfolio management app Blockfolio for $ 150 million.
The acquisition could attract 6 million users to the exchange. While Blockfolio doesn’t have as many unique users as CoinMarketCap, its user engagement rate is much higher – over 150 million views per month.
Blockfolio co-founder and CEO Ed Moncada told Cointelegraph that the company will continue to operate as a standalone app.
The US cryptocurrency exchange Coinbase is actually a leader in the number of acquisitions to date – six more than Binance. Throughout its history, the company has completed no fewer than 16 deals, the most recent of which was the acquisition of the main brokerage platform Tagomi for $ 90 million.
Tagumi reportedly suffered in revenues of only $ 1 million from its annual turnover of $ 1 billion after lowering trading fees.
Listed companies have also joined: CleanSpark, an advanced software company, bought ATL Data Centers, a cryptocurrency mining company, for only $ 20 million per share.
Other notable acquisitions include Galaxy Digital’s acquisition of DrawBridge Lending, a digital lending and asset platform, and a future blue liquidity provider.