Binance US courts $100 million at about 22% of its 2022 pre-money valuation

The 2022 round closed in April 2022 ^[3], 14 months before the SEC sued ^[22], so the 22% in the headline ^[17] compares the exchange before its troubles with the exchange after them. The comparison is also looser than it looks. The $4.5 billion was a pre-money figure ^[3], and the new $1 billion has not been labelled either way, so $100 million buys 10% of the company if $1 billion is post-money and 9.1% if it is pre-money ^[19]. The 2022 round, at its $200 million floor, sold about 4.3% ^[20]. Existing owners are being asked to give up roughly twice the slice for less than half the cash ^[21].

We think the $1 billion prices lost business more than legal risk. The SEC case is over ^[6]. What remains, per Bloomberg, is a substantial erosion of market share after Binance Holdings' 2023 agreement with federal regulators ^[8], in a market where Coinbase and Kraken already command established customer bases ^[16]. The fee cuts are the company's answer, but a $1 billion price then rests on trading volume, and none of the three accounts quantifies it. The counter-thesis is that $1 billion is an opening position: Bloomberg said size, valuation and investor composition can still change before the process ends ^[4].

The list the money has to cover is long. Management has discussed all 50 states, derivatives licences, perpetual futures and prediction markets ^[9], and Binance.US wants some state money-transmitter licences reinstated ^[13]. It has also talked with outside liquidity providers, with Binance's global platform among the options and no approach decided ^[12]. Using them would mean the exchange is not funding all of its own market depth. It would also tie a company set up in 2019 as operationally independent to the platform it was set up apart from, and Changpeng Zhao holds significant ownership stakes in both ^[14].

If the round closes near $1 billion, the markdown stands. If it closes well above, the 22% was an opening position and our view of lost business is too harsh. If it stalls, the precedent is 2021, when Binance.US set out to raise $100 million and failed, reportedly because of regulatory concerns ^[23]. Binance.US has not confirmed Bloomberg's report ^[15], and Cryptobriefing says no final size, valuation or investor list has been confirmed ^[10].