Author: Nancy, PANews

After several rounds of acquisition rumors, Binance officially announced on the evening of March 12 that it has secured an investment of up to $2 billion from the Abu Dhabi investment institution MGX (Mubadala G42 X). This marks the first time Binance has introduced institutional investment in its development history and sets a record for the largest single investment in the cryptocurrency industry to date. This deal not only injects ample funds into Binance but also brings strategic endorsement, resource support, and policy protection from UAE sovereign capital.

Binance Welcomes UAE's Strongest Capital, MGX Invests $2 Billion in Crypto

On March 12, Binance officially announced a $2 billion investment deal with the Abu Dhabi-based investment institution MGX. MGX acquired a minority stake in Binance, marking its first foray into the cryptocurrency and blockchain sector. This is also the largest single investment in cryptocurrency history, reportedly completed through stablecoins, which will provide Binance with substantial financial support.

Compared to the investment amount itself, the background of MGX, a technology investment company, has sparked widespread attention and discussion in the market. Abu Dhabi MGX was jointly established in 2024 by the Abu Dhabi sovereign fund Mubadala Investment Company and AI giant G42 (Group 42), exemplifying a powerful collaboration.

Mubadala is a heavyweight player among global sovereign wealth funds, originally established in 2002 as Mubadala Development Company, wholly owned by the Abu Dhabi government. In 2017, the Abu Dhabi government officially formed Mubadala Investment Company by merging Mubadala Development Company with the International Petroleum Investment Company (IPIC). As of the end of 2023, Mubadala manages assets exceeding $300 billion, ranking among the top ten sovereign wealth funds globally, and has established deep collaborations with international giants such as Microsoft, BlackRock, and SoftBank.

G42 is a pioneer in AI and cloud computing supported by the Abu Dhabi government and is a major driver of AI technology innovation in the UAE. G42 is backed by heavyweight investors such as Mubadala, American private equity giant Silver Lake, and Microsoft, and has formed strategic alliances with leading tech companies like OpenAI, NVIDIA, Dell, and Cisco.

In addition to the strength of the investment institution, the leadership behind it is also noteworthy. Tahnoun bin Zayed Al Nahyan, the chairman of MGX's board, is one of the core power figures in the UAE. He is the sixth son of the UAE's first president, Zayed bin Sultan Al Nahyan, and the brother of the current UAE president, Mohamed bin Zayed Al Nahyan.

As a key member of the Abu Dhabi royal family, Tahnoun not only serves as the Deputy Ruler of Abu Dhabi and National Security Advisor but also manages key institutions such as G42, Mubadala, ADQ, International Holding Company (IHC), and First Abu Dhabi Bank (FAB). His business empire spans multiple fields, including AI, energy, finance, and cryptocurrency, driving Abu Dhabi's transformation from an oil economy to a technology powerhouse. According to Bloomberg's 2023 estimates, the total assets he controls amount to as much as $15 trillion.

Tahnoun is known for his low-key and mysterious demeanor, often seen wearing sunglasses and rarely granting media interviews, leaving little known about his private life. The Financial Times describes him as a "secret player in the desert," while The Economist has referred to him as "the brains behind the UAE."

Tahnoun views AI technology as the core driving force for the country's future. Since its establishment in March 2024, MGX has invested in AI companies such as OpenAI, xAI, and Databricks, and has participated in large AI-related projects like Stargate and GAIIP. Notably, in January of this year, MGX planned to contribute approximately $7 billion to the "Stargate Project," an AI initiative involving OpenAI, SoftBank, and Oracle.

It is worth mentioning that the market widely speculates that Binance CEO Richard Teng played a role in this investment. In Binance's investment statement regarding GMX, it emphasized that Richard Teng previously served as the head of the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority and played a key role in promoting one of the world's first regulatory frameworks for cryptocurrencies. His leadership is crucial to Binance's compliance strategy. Before officially taking over as CEO of Binance, Richard Teng was promoted four times in less than two years, achieving a remarkable ascent.

Additionally, Binance's previously announced proof of reserves indicates that the majority of its crypto assets are allocated to stablecoins, and the separation of Binance's investment department, Binance Labs, into an independent family office, YZi Labs, at the end of last year, has also led the community to speculate that these moves may facilitate MGX's investment valuation confirmation.

Rejecting Financial Investment, Is the UAE Becoming Binance's New "Sanctuary"?

Although the announcement did not disclose Binance's investment valuation, considering CZ's mention of financing with a single-digit equity stake, the market speculates that if the investment stake is between 5%-10%, Binance's valuation for MGX would be between $20 billion and $40 billion. This is significantly lower than the rumored valuation of $200 billion to $300 billion when seeking investment from Singapore's sovereign fund in 2021. The UAE "got a bargain," while Binance is "making friends" in search of protection from a sovereign nation.

As one of the largest cryptocurrency exchanges in the world, Binance has long been shifting its headquarters due to regulatory pressures in various regions. However, in recent years, the UAE has gradually become an important operational and strategic center for Binance.

MGX organized a gathering in Abu Dhabi with CZ and OpenAI founders (image source from the internet)

According to official disclosures, Binance has approximately 1,000 employees in the UAE, accounting for 20% of its global team, and has established offices in both Dubai and Abu Dhabi. Additionally, in terms of regulatory compliance, Binance has obtained a Virtual Asset Service Provider (VASP) license from the Dubai Virtual Assets Regulatory Authority (VARA) and "in-principle approval" (IPA) from the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM), providing legitimacy and a foundation for Binance's business expansion in the UAE.

Moreover, Binance founder Changpeng Zhao is now a UAE citizen and owns property in Dubai. He has repeatedly expressed optimism about the UAE's crypto ecosystem. At the same time, Richard Teng revealed in an interview at the end of last year that the UAE is "very attractive" as Binance's headquarters base. However, when asked whether Abu Dhabi and Dubai, the two largest cities in the UAE, are major competitors, he declined to comment.

The UAE's proactive crypto policies are considered one of the key reasons for Binance's deepening engagement in the market. Since 2021, the UAE has been committed to building a global digital asset center through a series of forward-looking policies, such as Dubai's "Virtual Asset Strategy" and the financial innovation framework of the Abu Dhabi Global Market. This regulatory-friendly environment provides Binance with a "sanctuary," and the market generally views this GMX investment as a form of endorsement from the UAE.

In fact, as the global trading volume leader, Binance has strong profitability. Earlier, PANews reported that Zhao Changpeng had disclosed that Binance's net profit ($1 billion) and revenue ($5.5 billion) in 2022 accounted for approximately 18.18%. Based on this calculation, Binance has earned at least $8.87 billion in substantial profits from 2021 to 2023. As early as 2018, Binance also rejected an investment from Sequoia Capital, leading to a legal dispute, with Zhao Changpeng explicitly stating that Binance did not need external funding and was only interested in collaborating with venture capital firms that could help the exchange cooperate with regulators and obtain operating licenses.

Years later, Binance co-founder He Yi reiterated, "We welcome sovereign funds, but financial investors can pass." This statement also suggests that Binance is seeking not just funds in the UAE, but also policy protection and potential market growth. After the UAE, whether other sovereign funds from different nations will participate in Binance's investment remains a topic of speculation in the community, with rumors suggesting that sovereign funds from other Middle Eastern countries and BlackRock in the U.S. have also had contact with Binance.

Will Binance have a next strategic investor? And will it explore new markets with the endorsement of new investments? This remains to be seen.

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