Inventory: Major M&A events of cryptocurrency companies in 2020

The blockchain industry has emerged from the chaos brought on by the 2020 pandemic, with the coronavirus leading to a "remote" work environment in which many companies have thrived.

In 2020, there were 83 M&A transactions worldwide with a total transaction value of nearly $700 million. This is the largest M&A transaction volume ever and a significant increase from 2018, which set a record of 69 M&A transactions. Most of the transaction activity last year was carried out within the industry, with few external companies involved in the industry's consolidation.

It is reported that more than 90% of the acquisitions worth up to $691 million came from the top three buyers: Binance ($400 million), FTX ($150 million) and Coinbase ($90 million).

Binance acquired CoinMarketCap for $400 million at the end of March 2020, the largest acquisition in the history of the blockchain industry. Only two acquisitions of this magnitude can be compared with it in 2018: Circle and NXMH also acquired Poloniex and Bitstamp for $400 million respectively.

Binance, the leading exchange by trading volume, has been heavily criticized for its acquisition of CoinMarketCap, a data analytics company that provides comparative analysis data on cryptocurrency exchanges (including Binance), so the acquisition appears to represent a conflict of interest.

Messari analyst Jack Purdy told Cointelegraph that no matter how well the two companies perform, the acquisition sets a negative precedent for the blockchain industry. He said: "This does represent a fundamental conflict of interest and has external negative impacts on the blockchain space. It's like Joe's Pizza being on a list of the top ten pizza restaurants in New York, and the people who use that list happen to be the least informed people who decide where to go for pizza."

“Even if Binance or CoinMarketCap had the best of intentions, rankings are unlikely to be immune to potential biases by their creators. If a system’s objective weighting would hurt Binance’s position, it would most likely not be implemented.”

Binance said that both companies are independent entities and that CoinMarketCap is not biased. Despite early criticism, attitudes toward the acquisition appear to have softened in recent months. In October 2020, FTX CEO Sam Bankman-Fried tweeted that Binance was actually CoinMarketCap’s savior:

“From the day Binance acquired CoinMarketCap, its situation started to improve a lot. CoinMarketCap still has a long way to go, but its product has become a competitive product.”

This acquisition is not the only one for Binance, which has also acquired several other companies during 2019 and 2020, including cryptocurrency debit card provider Swipe, for an undisclosed amount. Similar to CoinMarketCap, Swipe COO John Khenneth also said: "This transaction provides for Swipe to operate independently of Binance."

Other companies acquired by Binance include South Korean won stablecoin firm BxB, decentralized application information platform DappReview, and Indian cryptocurrency exchange WazirX.

In a recent press release, Binance founder and CEO Changpeng Zhao hinted that Binance will acquire 20 to 30 other companies in 2021, further consolidating its position in the cryptocurrency space.

Cryptocurrency exchange FTX, which launched in 2019, is another company that has dominated nine-figure acquisitions in 2020, buying portfolio management app Blockfolio for $150 million.

The acquisition has the potential to bring its 6 million users to the exchange. While Blockfolio does not have as many unique visitors (UV) as CoinMarketCap, user engagement (PV) is much higher, with more than 150 million page views per month.

Blockfolio co-founder and CEO Ed Moncada told Cointelegraph that the company will continue to operate as a standalone application.

In fact, U.S. cryptocurrency exchange Coinbase has made the most acquisitions to date, with six more than Binance. Coinbase has completed at least 16 deals in its history, the most recent of which was the $90 million purchase of prime brokerage platform Tagomi.

Tagomi reportedly has an annual transaction volume of just $1 billion and revenue of just $1 million after the drop in transaction fees.

Public companies also got in on the action, with advanced software solutions company CleanSpark acquiring crypto mining company ATL Data Centers for less than $20 million in company stock.

Other notable acquisitions include Galaxy Digital’s acquisition of digital asset investment and lending platform DrawBridge Lending, and futures market liquidity provider Blue Fire Capital. Although the data was not disclosed, Galaxy Digital said that DrawBridge will eventually have more than $150 million in third-party assets.

In September 2020, New York-based CB Insights announced that it would soon open an office in Amsterdam as part of its acquisition of blockchain data provider Blockdata for an undisclosed amount.

Smart contract provider TrustSwap has also expanded its reach, acquiring its biggest competitor, Team.Finance.

Hong Kong-based OTC trading firm Genesis Block’s recent acquisition of Ethereum layer-2 scaling solution OMG Network is said to help accelerate the development of OMG Network, especially DeFi.

PayPal is also looking to join the M&A camp after supporting cryptocurrency purchases for the first time; however, talks to acquire cryptocurrency custody provider BitGo appear to have fallen through. PayPal is rumored to be in talks with other crypto companies.

As decentralized finance has surged this year, emerging DeFi protocols have also begun to merge. In November, Yearn.finance has made a number of partnerships and mergers, including with market insurance provider Cover Protocol and lending protocol Cream Finance.

While mergers and acquisitions are often a sign of a thriving industry, they have led some critics to worry about increasing concentration. Top companies’ acquisitions of rivals strengthen their control over the market and potentially reduce competition.