Illustration: Sarah Grillo/Axios
Crypto exchange giant Binance poured $500 million into Elon Musk's Twitter acquisition.
Why it matters: Binance sees this as "an R&D opportunity" to apply blockchain and Web3 technology to Twitter, chief strategy officer Patrick Hillmann tells Axios.
Behind the deal scenes: According to Hillmann, Musk's statements about Twitter's spambots and free speech caught the attention of Binance CEO Changpeng Zhao.
- After 40 hours of debate with Binance's leadership team, Zhao reached out to Musk via Twitter about participating in the deal. After some discussions (and agreement) about Musk's vision for the company and these various issues, Binance proceeded to work with Musk's transaction team on joining the financing.
- Binance is not getting any board seats or formal advisory participation, per Hillmann. Instead, the company expects to organically engage with Musk and Twitter down the line about ways to collaborate or help in certain areas.
- Hillmann also notes that the two teams did not discuss exit strategies or expectations of what the company could be worth eventually.
Between the lines: "Twitter has always been a really important platform for crypto, going back to immediately when [bitcoin creator Satoshi Nakamoto] started to publish his emails… it was really talked about globally on Twitter," says Hillmann.
- "Over the last two years, [Zhao] started to see that no matter what he would put up on Twitter, his Twitter feeds would get inundated by bots and shills, and it completely eliminated what used to be a very robust dialogue around policy and innovation," he adds. "Those types of schemes also create significant reputation issues for us."
The bottom line: "Right now we’re still living in a Web2-dominated world, and we’re just going to have to continue to work with Web2," says Hillmann.
- "Too many people have one of two views: either everything in crypto is going to zero and Web3 is fake… or Web3 is going to change everything in our lives… The reality is something in the middle."