GM,

This week’s issue is the second of a two-part series on media. We looked at the power that outlets have and now we are looking at the scene after two major outlets—Coindesk and The Block—found new owners in November.

The market may be quiet, but there’s plenty of drama playing out in the outlets that document the industry, and you can expect there'll be plenty more to come.

Best,

Jon and Gary

What’s going on?

The Block, a five-year-old media outlet covering Web3, was acquired by Foresight Ventures—the investment arm of crypto exchange Bitget—on 13 November. Foresight paid $60M for an 80% controlling ownership, mostly buying out former CEO Mike McCaffrey who had taken loans from convicted FTX CEO Sam Bankman Fried.

Barely a week later, Coindesk—The Block’s biggest rival and the longest-running Web3 media outlet—was bought outright by Bullish, a crypto exchange run by long-standing crypto firm EOS. The deal is undisclosed but sources close to the transaction said it is valued around $100M.

SO WHAT?

1. A lack of independence?

These deals could compromise the independence of both Coindesk and The Block, arguably the two most influential media outlets focused on Web3.

Now they’ll be owned by major industry players who have a lot of skin in the game:

• Bitget is one of the top 15 exchanges based on daily transaction volume
• Foresight Ventures has over $100 million for investment in startups
• EOS is one of the largest holders of Bitcoin with 164,000 BTC
• Bullish was launched by EOS in 2021 with $10 billion in funding, which includes external investors like Peter Thiel

Maintaining their ownership is akin to a major financial institution buying a news organization like The Wall Street Journal or Bloomberg, pointed out Jason Yanowitz, a co-founder of rival Web3 media outlet Blockworks.

“It crushes the editorial integrity of the brand. I'd assume every reporter will leave within 6 months,” Yanowitz wrote on X.

Frankly, this ethical challenge isn’t new to either outlet. Coindesk has been owned by Digital Currency Group (DCG) which runs numerous Web3 businesses and has made over 200 investments. The Block, meanwhile, ran into trouble when it emerged that McCaffrey, its former CEO, had borrowed $27M in loans from Bankman Fried.

However, this new level of conflict is far greater for both.

2. Crypto media draws premium pricing

Considering that both media outlets were sold out of necessity, they both drew surprisingly significant prices. 

The Block had been looking to buy out since it emerged in December 2022 that former CEO McCaffrey took loans from Bankman Fried. Coindesk, meanwhile, had a front-yard 'For Sale' sign for over a year as parent DCG looked to shed units because of the impact of last year’s market collapse—its Genesis lending service, for one, owes at least $3.4 billion to creditors.

Web3 media is still appealing, however, such is its power and influence—which can move markets as we wrote in last week’s edition. There’s also the power to do good. Coindesk won a Gerald Loeb Award, one of the top prizes in finance and business journalism, for exposing the financial scam of the FTX business which subsequently led to its collapse and the trial of Bankman Fried. (In a big win for editorial independence, these revelations subsequently caused the financial troubles of Coindesk's owner, ultimately leading to the outlet's sale.)

Unlike other media that struggle to monetize, these two outlets seemingly have more sustainable business models than just advertising despite making some layoffs this year. 

The Block monetizes through a paid premium membership that unlocks paywalled stories and provides data and insight. It claims to be profitable. Coindesk, meanwhile, leans on its indices business and successful event program, Consensus. 

3. Expect more competition 

Still, with uncertainty over new ownership at both Coindesk and The Block, we can expect more competition from Web3 press.

CoinTelegraph is the other long standing, top-tier title—we covered its influence in detail last week—while Blockworks is another notable outlet. The latter runs events and a data service, earlier this year it raised $12 million at a valuation of $135 million, notably higher than either The Block or Coindesk sold for. 

Newer media have also entered the scene, too. 

NFT Now fundraised its launch by raising $1.1 million from issuing membership NFTs while Digital Frontier is a soon-to-launch outlet from staff that previously worked at Bloomberg, WIRED, The Block and others. Then there’s Decrypt, which is raising funding after becoming an independent entity last year when it raised an initial $10 million.

On top of that, more traditional, financial media continue to ramp up their coverage of Web3.

Much of the focus next year is whether Web3, and particularly crypto tokens, will heat up and come out of the crypto winter but the media battle is one to keep an eye on.

News bytes

The big news last week saw Binance plead guilty to money laundering violations and agreed to pay a record settlement of $4.3 billion in fines and restitution to the U.S. government. It is expected that founder and CEO Changpeng Zhao (CZ) will serve time in jail—he was released on a $175 million bond and will be sentenced in February 2024. 

Richard Teng, a former regulator at SGX with three decades of finance industry experienced, replaced CZ and he has already pledged to make Binance a regulatory compliant business that has learned from its past

Binance was prosecuted for its role in enabling terrorist funding but a new Reuters report found that TRON has emerged as the go-to platform for terrorist groups targeting Israel, surpassing Bitcoin and Ethereum

Circle, the USDC stablecoin issuer, is making a push into Japan in partnership with finance firm SBI Holdings

Video game maker Square Enix this week begins selling NFT-based characters for its first Web3 game, Symbiogenesis—that’ll be an interesting measurement of where NFT gaming currently stands

That’s all for this week!

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