Binance could be about to acquire popular crypto metrics website CoinMarketCap for a whopping $400 million cash and stock deal. According to The Block, Binance are in the latter stages of tying up the deal for the platform which was founded in 2013 which would represent a major coup for the platform.
The news has led to a largely negative response within the community, with some claiming it could lead to reduced impartiality on the site and a conflict of interest from Binance’s perspective, which could further sully their already tarnished reputation.
Binance Creating Crypto Funnel
The Block cites a source “familiar with the deal” as saying that the exchange is willing to pay $400 million in cash and stock for CoinMarketCap, which has been the go-to site for crypto prices and other data since its inception seven years ago. The deal, while initially expensive, could be a major coup for Binance if it can act as an onboarding point for visitors looking to buy tokens.
The idea would be to create a funnel for new users, creating an ecosystem that sees them go to CoinMarketCap to find out about tokens and then onto Binance to buy them, without any other exchanges getting a look in. This however is where the concern over conflict of interest comes in, as Binance will have the opportunity to marginalize other exchanges and heavily promote themselves, something picked up instantly by the community:
I wonder how Binance is going to deal with the obvious conflict of interest. CoinMarketCap will no longer be impartial (even though they didn’t already have a good reputation). What CoinMarketCap kills at though their SEO. They drive traffic from a ton of non-crypto folks
— Larry Cermak (@lawmaster) March 31, 2020
— 21Bitcoin.eu (@21bitcoinEu) March 31, 2020
As well as receiving financial benefit from the raft of new users, Binance would also be able to tie in a CoinMarketCap listing as an incentive to projects looking to launch an IEO through them, which presents more issues with competition. Despite its recent problems, Binance still remains the most sought-after exchange for tokens to get listed on, while CoinMarketCap has been the most sought-after crypto index to get listed on for many years.
The deal is of such significance to the crypto scene that if there were something like a competition commission in cryptocurrency then this deal would be on their desks before you could say ‘monopoly’ and would almost certainly be rejected.
As it is, the crypto world may have to get used to a Binancification of one of the rocks of the crypto landscape as Changpeng Zhao continues his attempts at centralizing the decentralized space.