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 capital MGX announced a $2 billion investment in Binance, marking MGX's first investment in crypto and Binance's first acceptance of institutional investment, as well as 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 bringing together the most powerful and wealthy royal family members and "tycoons" from the UAE.

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

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MGX (MetaGPT X) was established only 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 funds are essentially in Tahnoon's hands, as he oversees the Abu Dhabi Investment Authority (ADIA), which invests overseas and has a scale of $853 billion, and the Abu Dhabi Developmental Holding Company (ADQ), which invests domestically and has 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, making it the other half of Abu Dhabi's sovereign funds. The CEO of MGX is also Ahmed Al Idrissi, the head of Mubadala's direct investment division.

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

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 in the Middle East, "Jais"; G42 Cloud is one of the largest cloud computing platforms in the region and holds a highly strategic position in the UAE, 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 public information from the Abu Dhabi government, MGX's investment strategy will focus on the following three areas: artificial intelligence infrastructure, semiconductors, and technologies and applications that support AI.

MGX has participated in the latest round of financing for OpenAI and 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 signal that UAE royal funds will promote the widespread adoption and compliant development of digital assets through investment.

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

Why is Binance, which is not short on funds, securing a massive investment now?

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

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 capital?

Finding a local protector may be one of the objectives. Under the pressure of regulatory compliance in crypto, Binance has faced many challenges, 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 goes far beyond the funds themselves. "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 the centers of national power 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 does this portion of equity come from has sparked some speculation.

Last November, 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.

However, regardless of the circumstances, aligning with the UAE government is an extremely important historical milestone for Binance and the crypto space.