Giant cryptocurrency exchange Binance to take $200m stake in Forbes as media firm plans $630m listing in New York through blank-cheque company
Binance, one of the world’s biggest cryptocurrency companies, is to take a $200 million (£148m) stake in Forbes, as the 105-year-old media company prepares a stock listing via a merger with a blank-cheque company.
The investment by Binance, which since being founded in 2017 has grown to become the world’s largest exchange in the daily trading volume of cryptocurrencies, comes as Forbes seeks $400m in private investment as part of its plans to list in New York via merger with the special-purpose acquisition company (SPAC) Magnum Opus Acquisition Limited. The offering is expected to value Forbes at $630m.
The proposed investment by Binance Capital Management, the crypto group’s British Virgin Islands-registered investment fund, would see two Binance executives appointed as directors on Forbes’ board.
Forbes said the deal would help make it a leader in supplying information about the digital assets typically traded on Binance’s platform, such as Bitcoin.
Some media watchers, however, said the deal raised concerns about Forbes’ editorial independence and potential conflicts of interest.
Binance sued Forbes in 2020 for defamation over an investigation by the magazine that said the Cayman Islands-registered crypto company used its complex corporate structure to intentionally evade US regulation, a claim Binance denied. The exchange later dropped the case.
Changpeng “CZ” Zhao, Binance’s founder, said in a statement he sees media as “an essential element to build widespread consumer understanding and education” around cryptocurrencies and blockchain technologies.
The Chinese-Canadian billionaire, who initially founded Binance in China, later clarified his remarks on Twitter, saying he was focused on helping Forbes develop its technology and that the company’s editorial independence was “sacrosanct”.
He told broadcaster CNBC that Binance is also looking into investments in other firms in traditional industries as it looks to become a provider of blockchain services.
1/Had some questions in my DMs. Forbes editorial independence is and will always be sacrosanct. The strength of the Forbes brand and our investment depends on that continued independence.
— CZ 🔶 Binance (@cz_binance) February 10, 2022
Forbes said Binance would provide technology advice to help the firm develop its brand and bring in paying subscribers while remaining “fiercely independent”.
The magazine, which published its first issue in 1917 – a century before Binance was founded – is known for its rankings of the world’s richest people, including those who have gained wealth recently through the world of digital finance.
In 2018 Forbes featured Zhao on its cover, and August 2021 it estimated the Binance founder’s wealth at $1.9bn. Bloomberg in January estimated it at $96bn.
Cryptocurrency companies are currently moving to consolidate an image of legitimacy, even as they face increased regulatory scrutiny and criticism from many regulators and governments.
Binance itself is the subject of an investigation by the Internal Revenue Service and the Department of Justice that was first reported in May 2021.
Henri Arslanian, a partner at PwC who advises crypto firms, noted that the company’s purchase of a large stake in Forbes would raise questions, even if there is no real conflict of interest.
“Binance buying part of Forbes is like McDonald’s buying part of Yelp or Marriott buying part of Trip Advisor,” he wrote on Twitter. “Even if no conflict of interest, there may be the appearance of conflict.”
Forbes was family-owned until 2013, when it sold a majority stake to Hong Kong-based Whale Media.
Binance buying part of Forbes is like McDonald’s buying part of Yelp or Marriott buying part of Trip Advisor.
Even if no conflict of interest, there may be the appearance of conflict.
— Henri Arslanian (@HenriArslanian) February 10, 2022
The company’s chief executive, Mike Federle, said Forbes is looking to become “a true leader” in the field of digital assets.
“With Binance’s investment in Forbes, we now have the experience, network and resources of the world’s leading crypto exchange and one of the world’s most successful blockchain innovators,” he said.
“Forbes, already a resource for people interested in the emerging world of digital assets, can become a true leader in the field with their help.”
The firm has 45 licensed local editions covering 76 countries, while its online edition draws on a large pool of contributors, a model that has at times raised questions about the brand’s reliability.
Last week former contributor Heather Morgan was accused of helping to carry out a money-laundering scheme for millions of dollars in cryptocurrency stolen in a 2016 hack of a Bitcoin exchange. Forbes said its relationship with Morgan ended last year.