Binance co-founder and CEO Changpeng “CZ” Zhao has experienced a significant decrease in his net worth, losing $11.9 billion due to falling trading volumes on his exchange. This drop in wealth was caused by the Bloomberg Billionaires Index cutting Binance’s revenue estimates by 38% on October 26th, resulting in Zhao’s placement on the rich list plummeting to 95th place.
Currently, Zhao’s net worth stands at $17.3 billion, marking an 82% decline from its peak of $96.9 billion in January 2022 when he held the 11th spot among the world’s wealthiest individuals.
The revenue estimates for Binance were revised after a decline in exchange volumes, affecting Zhao’s personal fortune. Bloomberg’s index calculated these revenues by analyzing spot and derivatives trading data from popular crypto data aggregators, CoinGecko and Coinpaprika.
Over the course of seven consecutive months, Binance’s spot trading market share dropped to 34.3% as of September. In contrast, it held a share of over 55% in January. Binance.US, the company’s arm based in the United States, also experienced a decrease in trading volumes, reaching new lows last month.
The decline in Zhao’s net worth and Binance’s diminishing trading volumes follow lawsuits filed by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC sued both Zhao and Binance in June, alleging illegal operations, the sale of unregistered securities, and mishandling of customer assets. Meanwhile, the CFTC claimed that Binance failed to properly register with the regulator.
Zhao and Binance have strongly denied the allegations made by both regulatory bodies and are actively seeking to dismiss the lawsuits.
Zhao’s recent loss of wealth can be compared to that of his former rival, Sam Bankman-Fried. In November 2022, Bankman-Fried faced a similar fate when his $16-billion fortune was virtually wiped out after FTX disclosed its liquidity crisis just days before filing for bankruptcy.
Some speculate that the crisis was sparked by a tweet from Zhao, in which he announced the sale of Binance’s holdings in FTX Token (FTT). This announcement led to a wave of withdrawals from FTX. Initially, Zhao expressed interest in buying the struggling exchange but ultimately pulled out less than 48 hours later.
Bankman-Fried is currently on trial, where he has pleaded not guilty to charges of fraud and conspiracy. Zhao’s decrease in net worth serves as a reminder of the volatility and risks associated with the cryptocurrency market.
In conclusion, Changpeng “CZ” Zhao, co-founder and CEO of Binance, has experienced a significant decrease in his net worth due to falling trading volumes on the exchange. The revision of Binance’s revenue estimates by the Bloomberg Billionaires Index led to a decline in Zhao’s position on the rich list. This decrease in wealth follows lawsuits filed by the SEC and CFTC against Zhao and Binance, which they vehemently deny. Zhao’s loss of wealth parallels the financial downfall of his former rival, Sam Bankman-Fried, underscoring the volatility and risks inherent in the cryptocurrency market.