Is Binance’s CoinMarketCap Acquisition a Conflict of Interest or a Win-Win-Win for All?
The rumor has been confirmed, Binance has acquired CoinMarketCap for an undisclosed amount.
On April 2nd, both the companies announced that the leading crypto exchange has acquired the crypto data tracking site that recently launched a new Liquidity Metric, added derivative market data and new rating analytics.
Welcome 👋 https://t.co/zXGOsG743M
— Binance.US 🇺🇸 (@BinanceAmerica) April 2, 2020
The acquisition will “enable us to build on each other’s strengths, jointly serving as infrastructure providers of crypto,” said Binance founder and CEO Chagpeng Zhao.
As part of this transition, CMC founder Brandon Chez will be stepping down as the CEO after seven years and will be replaced by the current Chief Strategy Officer, Carylyne Chan who will act as an interim CEO. Chez said,
“I believe that of all the teams in the space that could acquire CoinMarketCap, Binance is one of the very best options.”
New phase of growth
Last year, CMC came under the scrutiny for reporting “false” trading volume, concerns that the company conceded to be valid. CMC addressed the problem by adding a column for “adjusted volume” which has about the same numbers as “reported volume.”
The data tracking site might be “working hard to build constructive solutions” but according to Nic Carter of Coin Metrics, it was like pouring a small cup on a blazing house fire.
Now, Binance has purchased the company and Chan is optimistic about this “new phase of growth.” She said,
“We have been public about our commitment to remaining neutral by avoiding censorship and judgement of projects or exchanges that we list, preferring to let users make their own decisions based on the data. We are delighted that the Binance team has been unequivocal in ensuring that we can continue to adhere to our methodology without prejudice.”
CMC will remain independent
However, the vast majority of the community is not feeling good about this acquisition is a “conflict of interest” and would see “more fraud, abuse, rigged rankings & project extortion to get ‘listed.’”
1/2 @CoinMarketCap has been the most damaging site in crypto history. In @blockchain2035 we explain the #MarketCapFallacy. By falsely comparing truly decentralized #blockchain projects to centralized/ premined scams countless investors have been mislead. https://t.co/smQPKJwklF
— Jared Tate ©️ (@jaredctate) April 1, 2020
But CMC maintains that it will be run as an “independent business entity” and that “Binance cannot make any changes in our business model unilaterally.”
CMC Killer: A “win-win-win for all of crypto”
While the market is criticizing this move, CMC’s competitor Messari Crypto’s founder Ryan Selkis believes this is a “massive win-win-win for all of crypto.”
Selkis has previously taken shot at the company for their “data quality” but he clarified that he’s “supposed to” because “they're the 800 lb gorilla in crypto data, and we compete for share.”
According to him, CME has the first-mover advantage, retail market, and ingrained habit to enter CMC in browsers to search prices which they realized early on in the game when their investors wanted them to build a “CMC killer.”
While Messari is a professional crypto data service with robust tools, CMC is a retail-focused company and Binance will add muscle to its data quality and help set exchange standards. Selkis said,
“I don't buy the narrative that Binance will “ruin” CMC's independence because CMC never had a pristine, high-quality brand to begin with! It was a great shitcoin business, but investors shat on them mercilessly. If anything brand value will rise.”