The deal is undisclosed, but Binance confirmed to TechCrunch that the compensation is a mixture of cash, Binance stock and a portion of its BNB token. U.S.-based Trust Wallet will remain independent following the deal, but Binance, which is headquartered in Malta these days, will assist running the admin side of the business and in non-technical areas like marketing.
“The Trust Wallet team shares the same values as us and the products are very complementary,” Binance CEO Changpeng “CZ” Zhao told TechCrunch in an interview. “For users who like to withdraw funds into a wallet now we have a product they can use.
“We plan to keep the app as independent as possible. There will be more features going into it but not so much from a Binance demand perspective. We are like the addition of a godfather for the baby… there’ll be some cooperation,” he added.
Trust Wallet may not be as well known as wallets such as Imtoken, Delta, or Blockfolio, but Zhao called the company a “diamond in the dirt” with “strong technical skills.”
“They haven’t done much marketing which is where we can help. They are strong technically but don’t like doing marketing, HR etc… now merging with us they don’t have to worry about money,” he added.
Money is, indeed, not a huge issue for Binance these days. The company made a profit in the region of $450-$500 million (dependent on token prices) from its first year of operations. That’s according to figures from the company, which uses 20 percent of its quarterly profits to buy back and ‘burn’ its BNB token.
Indeed, Trust Wallet did hold an ICO to raise capital but last month it decided to cancel the sale and return money to its investors.
Trust Wallet founder Viktor Radchenko, who is based in Mountain View, told TechCrunch that the decision was about getting back to developing the app and technology.
“I’m a product person and developer. I spend my time thinking about solving problems for the end-user. I never liked dealing with investors and money people, it is so much hassle,” he said. “Having resources will help us grow quicker and so I can focus on adoption for the users that don’t even have wallets.”
Radchenko said he is now setting his sights on growing the team from five developers right now to 10. The app is currently focused on Ethereum and Ethereum-based tokens, but the plan is to add support for other blockchains including Bitcoin, EOS, NEO.
Trust Wallet will also be one of a number default wallets supported by Binance’s upcoming decentralized exchange, which will remove the shackles of a decentralized exchange and allow users to trade directly with one another. Zhao said the highly-anticipated project is in “active development” although he was hesitant to put a date on when it will be ready.
This Trust Wallet deal is likely the first of many strategic acquisitions for Binance. The company announced plans for a $1 billion fund this summer, and Zhao said that the intention is to make 10-20 investments per year but also augment that with three to four strategic.
“We’re looking for strong tech teams,” he explained. “Acquisition will be a very key component to continuing to grow and contributing to this industry.”
Zhao said that Binance had considered buying companies to accelerate the development of its decentralized exchange, but it wasn’t able to identify the right match.
“Our requirements are very specific, we are looking for speed, there’s no need for fancy smart contracts,” he explained. “We didn’t find the right match for an acquisition [but are] still very open to someone who makes an ultra-fast blockchain.”
Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.