Crypto Investor Binance Splits from Venture Capital Arm

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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March 15, 2024 15:09 EDT

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Earlier this year, Binance quietly split from its venture capital division, Binance Labs, and established as an independent entity now valued at $10 billion. This change in operation became effective on March 15 under Binance’s newly appointed Chief Executive Officer, Richard Teng, who assumed the role four months ago.

Binance Labs Severs Ties, Maintains Branding

A disclaimer announcing the split

was published on the website saying, “Binance Labs is an independent venture and not part of the Binance Group nor is it involved in any of the businesses operated by the Binance Group (including but not limited to the Binance cryptocurrency exchange).”

Following the effect of this change in operation, personnel at Binance Labs now operate under separate employment agreements from Binance exchange staff. This is in line with the arrangements that are effective at the Binance-backed blockchain network, BNB Chain.

In an unexpected move, #Binance has spun off its venture capital arm, Binance Labs, into an independent entity valued at $10 billion.

This strategic decision aims to enhance operational efficiency and growth under the leadership of CEO Richard Teng. Despite the separation,…

— Satoshi Talks (@Satoshi_Talks) March 15, 2024

Investment Director at Binance Labs, Alex Odagiu noted that they are no longer affiliated with the Binance group as well. He said this while clarifying that the venture capital entity would continue to use the Binance brand under a licensing agreement.

Binance Labs has invested in over 250 projects since it launched. There are many companies in its portfolio that have been impacted by this transition into an independent firm. Some are industry giants like PancakeSwap, Polygon, Sky Mavis, and Curve DAO. Aptos Labs, LayerZero, and The Sandbox are some of the other companies involved.

In February, Binance Labs invested in Babylon, a Bitcoin staking protocol that introduced the concept of native Bitcoin staking. The investment enables users to stake their Bitcoins on Proof-of-Stake blockchains and earn yields without relying on third-party custody. This bridges services, or token wrapping mechanisms.

The unfolding events at Binance have been on the crypto community’s radar since a November settlement with US authorities. The authorities charged Binance $4.3 billion and demanded that founder and CEO Changpeng Zhao step down.

Despite its newfound independence, Binance Labs’ core operations are expected to stay unaffected, with an emphasis on finding and investing in promising crypto projects.

Venture Capital Trend Among Crypto Exchanges

In 2018, Yi He, who heads Binance Labs and co-founded Binance alongside Zhao launched the venture capital division.

As a venture capital and incubator, Binance Labs uses funds from the exchange’s profits to back early-stage crypto projects.

The splitting of these two entities does not appear to be a cause for major concern within the Binance ecosystem.

Binance still holds the largest market share of centralized exchanges (CEXs), accounting for about 50% of global trading volume.

The Binance native token, BNB, has experienced a slight decline since the news broke, however. At the time of reporting, BNB was trading at $584.31, representing a decrease of 2.81%.

Aside from Binance, popular exchanges in the crypto industry, such as Coinbase, OKX, and Kraken have also established venture capital businesses.

Coinbase Ventures was the second-most active investor in the crypto sector in 2023, according to data from PitchBook. Odagiu admitted that in Binance Lab’s case, the transition will not have much impact on the company.