Why did Binance, backed by the UAE royal family and not short of money, raise $2 billion?

Author: flowie, ChainCatcher

Just now, Abu Dhabi's state-owned capital MGX announced a $2 billion investment in Binance, marking MGX's first investment in crypto and the largest single investment in the crypto space to date.

What's more interesting is that MGX has significant backing, managing hundreds of billions in capital and comprising some of the most powerful and wealthy royal family members and "tycoons" in the UAE.

After heavily investing in AI, what does MGX's focus on crypto signify? And why is Binance, which has never been short of money, securing such a massive investment this time?

Hundreds of Billions Gamble After AI, UAE Royal Capital Aims at Crypto

MGX (MetaGPT X) was established just a year ago, jointly formed by the Abu Dhabi Artificial Intelligence and Advanced Technology Committee (AIATC), the Abu Dhabi Sovereign Wealth Fund Mubadala, and UAE tech giant G42. The assets managed by MGX are expected to exceed $100 billion.

MGX can be considered one of the most important strategic capitals for the UAE's economic diversification, bringing together top talents from politics, economics, and technology.

The chairman of MGX's board is Sheikh Tahnoon bin Zayed Al Nahyan, the son of the UAE's founder and the younger brother of the current UAE president, as well as the Deputy Ruler of Abu Dhabi and National Security Advisor.

The majority of the UAE's sovereign wealth funds are essentially under Tahnoon's control, overseeing the Abu Dhabi Investment Authority (ADIA), which invests overseas with a scale of $853 billion, and the Abu Dhabi Developmental Holding Company (ADQ), which invests domestically with a scale of $110 billion.

The vice chairman of MGX's board and investment strategist Khaldoon Khalifa Al Mubarak is the CEO of Mubadala, one of the three major sovereign wealth funds in the UAE. Mubadala manages assets exceeding $300 billion, representing another half of Abu Dhabi's sovereign wealth funds. The CEO of MGX is also Ahmed Al Idrissi, the head of Mubadala's direct investment division.

Other members of the MGX board include Jassem Al Zaabi, Vice Chairman of the UAE Central Bank, and G42 CEO Xiao Peng.

It is worth mentioning that G42 is one of the most important tech giants in the UAE, focusing on areas such as artificial intelligence, cloud computing, healthcare, and cybersecurity. For instance, G42 developed the most advanced Arabic large language model "Jais" in the Middle East; G42 Cloud is one of the largest cloud computing platforms in the region, holding a highly strategic position in the UAE and regarded as "the jewel in the crown of the UAE."

With hundreds of billions in capital and a top-tier lineup, what does MGX want to invest in?

According to publicly available information from the Abu Dhabi government, MGX's investment strategy will focus on the following three areas: artificial intelligence infrastructure, semiconductors, and core technologies and applications that support artificial intelligence.

MGX has participated in the latest round of financing for OpenAI, collaborated with BlackRock, Global Infrastructure Partners (GIP), and Microsoft to launch a $30 billion fund focused on the construction of data centers and their power supply; it has also participated in the "Gateway to the Stars" AI investment project announced by President Trump.

After heavily investing in AI and semiconductors, MGX has officially entered the cryptocurrency and blockchain space through its investment in Binance, which may indicate that the UAE royal funds will promote the widespread adoption and compliant development of digital assets through investment.

For crypto, the wealthiest national capital could bring a significant boost, accelerating the global application of blockchain technology and enhancing market confidence and compliance.

Why Did Binance, Which Is Not Short on Cash, Secure a Huge Investment Now?

As the largest cryptocurrency exchange, Binance is not short on cash.

In 2021, after turning down an investment from Sequoia Capital, Zhao Changpeng clearly stated 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.

Four years later, why is Binance securing a $2 billion investment from UAE state-owned capital?

Finding a local protector may be one of the objectives. Under the pressure of crypto regulatory compliance, Binance has faced turmoil, having been "expelled" from China, Tokyo, and Singapore before finally settling in Dubai.

Crypto KOL AB Kuai.Dong stated that the significance of this investment far exceeds the capital itself. "The entry of the UAE government is equivalent to inviting numerous top global political capitals to become supporters of Binance."

In the face of pressures such as compliance, aligning with national power centers is also a trend for crypto enterprises. In AB Kuai.Dong's view, compared to the power shifts every four years in North America, the UAE, Saudi Arabia, Bahrain, and Qatar are all super stable entities.

Seeking compliance and policy support by aligning with the UAE government is understandable, but why is the amount as high as $2 billion? Where this portion of equity sale comes from has sparked some speculation.

In November last year, Bloomberg reported that Zhao Changpeng received an offer to sell his controlling stake in the exchange—these shares constitute a significant portion of his personal net worth, but he refused to disclose who the buyer was or the price. Twitter users speculated that it might come from shares held by Zhao Changpeng's family, but no further public information has been disclosed.

Regardless, aligning with the UAE government is an extremely important historical milestone for Binance and the crypto field.