- Binance put $500 million into Elon Musk’s $44 billion Twitter deal back in 2022.
- The exchange’s original investment was converted into SpaceX shares, now worth over $1B.
- Binance Co-CEO Yi He said Binance’s yearly revenue is enough to cover the losses.
Binance co-founder Changpeng ‘CZ’ Zhao has pointed to the value of the exchange’s investment linked to Elon Musk’s business empire, even as Binance deals with a security breach that cost $6.3 billion.
The stake, which traces back to Musk’s 2022 Twitter (now X) buyout, is reportedly worth over $1 billion, raising the question of whether outside investments could help strengthen Binance’s finances in a crisis.
Binance put $500 million into Musk’s $44 billion Twitter deal back in 2022. Part of the goal was to help bring social media, blockchain, and Web3 tech closer together.
After a chain of corporate deals involving Twitter, xAI, and SpaceX, Binance’s original investment was converted into SpaceX shares. On October 30, CZ shared that Binance’s SpaceX holdings are now worth over $1 billion, more than double what the exchange originally put in.
Could the Investment Help Cover Binance’s Hack Losses?
Concerns escalated after Binance revealed a massive security breach costing roughly $6.3 billion.
Early findings suggest a hacker compromised a DevOps engineer’s work laptop, using it as a back door to breach internal server containers and send out unauthorized cashouts. Despite the heavy losses, Binance stated that its secret security passwords (the private keys protecting user crypto wallets) were never leaked or stolen.
The exchange says about $3 billion of the affected assets have been frozen on-chain, and has promised to cover all losses using its Secure Asset Fund for Users (SAFU) plus company funds. CZ’s remarks drew attention to the remaining financial exposure, but he didn’t say Binance would sell its SpaceX stake.
Following the incident, Binance Co-CEO Yi He said Binance’s yearly revenue is enough to cover the losses. Because of this, the exchange doesn’t need to sell off its valuable investments to cover the damage.
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Why a Billion Dollar Valuation Is Not the Same as Cash
Holding investments outside a company’s main business can help diversify its assets, providing an extra safety cushion when surprise expenses pop up. Nonetheless, owning shares in private companies or newly traded stocks isn’t the same as having funds sitting in a bank account, as those assets can be hard to convert into cash quickly.
Selling a large chunk of shares doesn’t happen overnight.
Early investors are often bound by lock-up rules that prevent them from selling immediately. On top of that, stock prices swing up and down constantly, meaning the actual amount brought in from a sale may end up being higher or lower than the current estimated value.
Owning shares in SpaceX certainly adds long-term value to Binance’s balance sheet, but its ability to cover immediate costs depends on actual available liquidity, how much is set aside for the emergency insurance pool SAFU, operating revenue, and the final price tag of the security incident.
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Related: Who’s Behind the $6.3B Binance Hack? Chainalysis, ZachXBT Point to North Korea
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