Binance joins hands with the UAE royal family: sovereign fund MGX spends $2 billion to enter crypto, is Binance "makes friends" undervalued?

Author: Nancy, PANews

After several acquisition rumors fermented, Binance officially announced on the evening of March 12 that it had received a capital injection of up to US$2 billion in Abu Dhabi investment institution MGX (Mubadala G42 X). This is the first time in Binance's development history that it has introduced institutional investment, and it also sets a record for a single investment in the crypto industry so far. This transaction not only injects sufficient funds into Binance, but also brings strategic endorsement, resource support and policy protection of UAE's sovereign capital.

Binance welcomes the strongest capital of the UAE, **MGX spends $2

billion to enter Crypto**

On March 12, Binance officially announced a US$2 billion investment transaction with Abu Dhabi-based investment institution MGX. MGX acquired a minority stake in Binance, achieving its first foray into the cryptocurrency and blockchain sectors. This is also the largest single investment in crypto history, which is said to be completed through stablecoins, which will also provide Binance with abundant financial support.

Compared with the investment amount itself, the background of MGX, a technology investment company, has attracted widespread attention and heated discussion in the market. Abu Dhabi MGX was co-founded by Abu Dhabi sovereign fund Mubadala Investment Company and artificial intelligence giant G42 (Group 42), and is a model of a strong alliance.

Mubadala is a heavyweight player in the global sovereign wealth fund. Its predecessor, Mubadala Development Company, was founded in 2002 and is wholly owned by the Abu Dhabi government. In 2017, the Abu Dhabi government formally established the Mubadala Investment Company by merging Mubadala Development Company and International Petroleum Investment Company (IPIC). As of the end of 2023, Mubadala's assets under management exceeded US$300 billion, ranking among the top ten sovereign wealth funds in the world, and has established deep cooperation with international giants such as Microsoft, BlackRock, and SoftBank.

G42 is a pioneering artificial intelligence and cloud computing enterprise supported by the Abu Dhabi government and is the main promoter of UAE's AI technology innovation. Behind the G42 are Mubadala, American private equity giant Silver Lake, and heavyweight investors such as Microsoft, and at the same time, they form strategic alliances with technology leaders such as OpenAI, Nvidia, Dell, and Cisco.

In addition to the strength of investment institutions, the helmsman behind them is more worthy of attention. MGX Chairman Tahnoun bin Zayed Al Nahyan is one of the core power figures in the UAE, the sixth son of the first UAE president Zayed bin Sultan Al Nahyan and the younger brother of the current UAE president Mohamed bin Zayed Al Nahyan.

As a key member of the Abu Dhabi royal family, Tahnoun not only serves as deputy chief of Abu Dhabi and national security adviser, but also manages key institutions such as G42, Mubadala, ADQ, international holding company IHC, and the First Abu Dhabi Bank (FAB). The business empire spans multiple fields such as AI, energy, finance, and cryptocurrency, promoting Abu Dhabi's transformation from an oil economy to a technological powerhouse. According to Bloomberg's 2023 estimates, the total assets it controls are as high as US$1.5 trillion.

Tahnoun is known for his low-key and mysteriousness. He often wears sunglasses and rarely accepts media interviews. The outside world knows very little about his private life. The Financial Times described him as "a secret player in the desert", and the Economist once called him "the brain behind the UAE."

Tahnoun regards AI technology as the core driving force for the country's future. Since its establishment in March 2024, MGX has invested in AI companies such as OpenAI, xAI, Databricks, and has participated in large-scale AI-related projects such as Stargate and GAIIP. In January this year, MGX plans to contribute about US$7 billion to the "Stargate Project" (an AI project involving OpenAI, SoftBank and Oracle).

It is worth mentioning that the market generally speculates that Binance CEO Richard Teng played a role in this investment. In Binance’s investment statement on GMX, it was also emphasized that Richard Teng, who served as head of the Financial Services Regulatory Authority in Abu Dhabi Global Markets (ADGM) and played a key role in promoting the world’s first crypto-regulatory frameworks, and his leadership is crucial in Binance’s compliance strategy. Before officially taking over as Binance CEO, Richard Teng was promoted four times in less than two years, and the promotion speed was a rocket-like leap.

In addition, Binance's previously announced reserves prove that it actually allocates most of its crypto assets as stablecoins, and divested Binance's investment department Binance Labs into an independent family office YZi Labs at the end of last year. These two previous actions have also been speculated by the community that may confirm the investment valuation to facilitate MGX.

**Refusing financial investment, the UAE becomes Binance 's new

"sanctuary"?**

Although Binance's investment valuation was not disclosed in the announcement, considering that CZ said it would consider single-digit equity financing, the market speculated that if the investment stake was between 5% and 10%, Binance would value MGX at US$20-40 billion, which is far from the valuation when it was rumored to seek investment in Singapore's sovereign funds for US$200-300 billion in 2021. The UAE "gave a bargain" and Binance "makes friends" to seek asylum from sovereign states.

As one of the world's largest cryptocurrency exchanges, Binance has long been relocated in many regions around the world due to regulatory pressure, and its headquarters ownership has been pending. But in recent years, the UAE has gradually become an important operational and strategic center of Binance.

 MGX organizes a gathering in Abu Dhabi, including CZ and the founders of OpenAI (pictures from the Internet)

According to official disclosures, Binance has about 1,000 employees in the UAE, accounting for 20% of the global team and has opened offices in both Dubai and Abu Dhabi. At the same time, in terms of regulatory compliance, Binance has also obtained the Virtual Asset Service Provider (VASP) license issued by the Dubai Virtual Assets Regulatory Authority (VARA) and the "In Principle Approval" (IPA) from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), providing legal protection and expansion basis for Binance's business in the UAE.

Binance founder Zhao Changpeng is now a UAE citizen and owns real estate in Dubai. He has repeatedly expressed his optimism about the UAE's crypto ecosystem. Meanwhile, Richard Teng also revealed in an interview at the end of last year that the UAE is "very attractive" as a Binance headquarters base, but he declined to comment when asked whether Abu Dhabi and Dubai, the two largest cities in the UAE, were major competitors.

The UAE's active crypto policy is considered one of the important reasons why Binance is deeply rooted in the market. Since 2021, the UAE has been committed to building a global digital asset center through a series of forward-looking policies such as Dubai’s “virtual asset strategy” and the financial innovation framework for Abu Dhabi’s global markets. This regulatory-friendly environment provides Binance with a "sanctuary" and the market generally believes that this GMX investment can be regarded as the UAE's endorsement.

In fact, as the global trading volume overlord, Binance has strong profitability. Previously, PANews also mentioned in the report that Zhao Changpeng disclosed in an early stage that Binance's net profit (US$1 billion) and revenue (US$5.5 billion) accounted for about 18.18%. If calculated based on this, Binance has achieved at least a considerable profit of over US$8.87 billion from 2021 to 2023. As early as 2018, Binance also rejected Sequoia Capital's investment. Both parties once discussed the Bogongtang. Zhao Changpeng even made it clear that Binance does not need external funds. He is only interested in cooperating with venture capital companies that can help exchanges cooperate with regulators and obtain operating licenses.

After many years, Binance co-founder He Yi also emphasized again, "Social funds are welcome, and financial investors are forgot." These remarks also imply that Binance is seeking not only funds, but policy protection and the possibility of market growth in the UAE. After the UAE, there are many speculations about whether sovereign foundations of other nation-states have participated in Binance's investment. There are even rumors that other Middle Eastern countries' sovereign funds and BlackRock in the United States have had contact with Binance.

Will Binance have the next strategic investor? It is worth looking forward to whether to open up new markets with the endorsement of new investments.