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Binance participates in Elon Musk’s purchase of Twitter

Yesterday Changpeng CZ Zhao confirmed it: Binance will participate in the financing campaign for Elon Musk’s purchase of Twitter. 

The news had already been announced in May, but after all that had happened, doubts had arisen. 

Bloomberg reports this, citing words spoken by CZ himself while he was in Riyadh, Saudi Arabia, where he attended the Future Investment Initiative conference.

CZ was explicitly asked whether Binance will keep its commitment made to Musk in May, and the CEO of Binance Holdings explicitly replied, “I think so.”  

The purchase of Twitter from Musk will cost about $44 billion, $13 billion of which will be financed by banks. 

Binance in May stated that it had committed $500 million to participate in the financing as part of its strategy to bring social media and news sites to the Web3 world.

So while this is a relatively small investment financially, given the total amount of the deal and the turnover of the world’s leading crypto exchange, it has motivations beyond the purely financial. 

Elon Musk and cryptocurrencies

Then again, the relationship between Elon Musk and the crypto world is a close one, particularly because of his support for Dogecoin. 

Musk is showing a decidedly deeper interest in the crypto world, so much so that Tesla still owns almost all of the BTC purchased in early 2021 at a price above $35,000. 

Yesterday he even responded to a tweet from Vitalik Buterin, the co-founder of Ethereum, clearly showing that he is following him. 

Thus Elon Musk is not only interested in Dogecoin, but also in Bitcoin and Ethereum, i.e., the two projects that dominate the crypto sector currently. 

Twitter and cryptocurrencies 

Although Twitter is not yet owned by Elon Musk, it seems that they have already started working on an integrated crypto wallet. 

According to a Bloomberg rumor, the deal between Elon Musk and Twitter is expected to be finally closed by the end of the week, so starting next week Twitter’s “Musk era” could begin. 

Twitter then seems poised to transform itself into an even more crypto-friendly social network than it has ever been.

It has always been the social network of choice for the crypto community, and over the past few years, it has also begun to integrate some crypto services. Then again, its co-founder, and former CEO, Jack Dorsey is a huge Bitcoin enthusiast. 

However, during the Dorsey era Twitter’s ownership was diffuse, with financial funds as the single largest shareholders. In short, until now it has been a public company very different from the private company it is about to become. 

Elon Musk is buying practically 100% of the shares, becoming the sole owner. Add this to the fact that Twitter is already the most crypto-friendly social network in existence, among the major ones, and the picture that emerges is one of possible even greater integration between Twitter and cryptocurrencies. 

In short, the path taken by Dorsey without the support of the company’s ownership could now be taken with force thanks to the support of the new ownership. 

What’s more, Musk seems intent on taking over as CEO of the company once it is acquired, thus giving a clear and sharp line to its evolution. 

If Binance also takes part in this shift, Twitter’s crypto integrations could also end up being very broad and deep. 

The problems Twitter may have with Elon Musk’s relationship with Binance

Bloomberg, however, also reports that US policymakers have concerns about this acquisition. 

One of these concerns also relates specifically to the involvement of foreign investors backing Elon Musk’s bid, and Binance is considered a foreign company. 

Twitter is a private company, and in theory politics should not be able to oppose foreign investment. However, it is also a rather important public platform in the US, precisely for the political world. 

And so some officials in the current Biden administration are considering subjecting some of Elon Musk’s initiatives to “national security reviews.” These initiatives would include the acquisition of Twitter, as well as SpaceX‘s Starlink satellite network. 

In addition to Binance, there are also other much more suspicious foreign backers, such as Prince Alwaleed bin Talal of Saudi Arabia, and the sovereign wealth fund of Qatar. 

On top of all this, there are also concerns regarding freedom of expression on Twitter, and in particular the possible reinstatement of Donald Trump’s blocked account in 2021. 

Biden has been Trump’s opponent, and he would certainly prefer that his account remain blocked. In addition, the issues surrounding compliance with current regulations for those who post freely on social networks are quite complicated and sensitive, so they could easily end up in the political crosshairs again. 

Twitter’s relationship with Binance over Elon Musk’s acquisition

At this time it is not yet clear what a possible partnership between Twitter and Binance might realistically consist of. 

However, it is possible to imagine that in the event that a real crypto wallet is actually integrated within the app, it could also end up offering cryptocurrency buying and selling services. 

Given that it is very difficult to imagine Twitter creating its own exchange, it seems more likely that it could rely on an external exchange in this case. At that point, Binance seems to be the major candidate to enter into a partnership for this purpose. 

It is worth noting that Binance already offers similar services, so much so that it also has several decentralized finance services based on the blockchain it created, BNB Chain. 

The nature of the relationship between Elon Musk and CZ is not well known, nor is the nature of the relationship between Musk and Vitalik Buterin. But once the Twitter purchase is completed, the new owner may find it rather easy to interact with one of its backers. 

Twitter vs Facebook

Missing from this picture, however, is an important element in trying to guess what Twitter’s crypto evolutions might be in the Musk era. 

For many months now, Facebook has been losing some users, albeit few, and some revenue. This is evidenced by the stock market performance of Meta, the parent company of the social network Facebook, which lost 59% during 2022. 

Among text-based social networks, Facebook is the largest in the Western world, with Twitter far behind in its performance. 

Elon Musk may be planning to nibble away a significant market share from Facebook, not least because in order for his financial plan to hold up he has to make his new social network’s revenues multiply several times. 

One of the solutions he may have in mind is to try to attract top digital creators by giving them a chance to earn more than they are currently earning on other platforms. 

In such a context, cryptocurrencies could lend themselves to facilitating digital financial transactions, especially if Bitcoin’s Lightning Network, which also enables micro-transactions, were to be used. 

Enabling micro-transactions on Twitter could open up a whole range of new revenue opportunities for creators, thus making the social network more palatable to its rivals. 

If Twitter really succeeds in draining a good amount of users from Facebook, it could eventually benefit the crypto market as well. 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".