The cryptocurrency industry has seen its fair share of ups and downs, and this roller-coaster ride is taking a toll on the fortunes of prominent figures within the space. One such individual is Changpeng Zhao, the founder of Binance, one of the world’s largest cryptocurrency exchanges. According to the Bloomberg Billionaires Index, Zhao has witnessed a significant decline in his estimated net worth, plummeting by a staggering $11.9 billion. This sharp drop represents an 82% decrease in his wealth since reaching its peak, leaving him with a current fortune of $17.2 billion.
The primary reason behind this substantial reduction in Changpeng Zhao’s wealth can be attributed to a 38% cut in the estimated revenues of Binance, a major player in the cryptocurrency exchange sector. Throughout the year, Binance experienced declining trading volumes, contributing significantly to Zhao’s financial setback. The Bloomberg Billionaires Index calculates Binance’s revenue using data from crypto-tracking services Coingecko and Coinpaprika, based on spot and derivatives trading figures.
Changpeng Zhao, who is 46 years old, played a noteworthy role in the recent events involving another prominent crypto figure, Sam Bankman-Fried. In November, Zhao announced the liquidation of a token associated with FTX, another cryptocurrency exchange, after reports emerged that Sam Bankman-Fried’s hedge fund, Alameda Research, held a substantial position in it. This announcement triggered a rush among FTX customers to withdraw their funds, overwhelming the exchange and ultimately leading to its bankruptcy within less than a week. Bankman-Fried, who had seen his net worth peak at $26 billion in March the previous year, saw his fortune wiped out in the aftermath.
Earlier this year, Binance had gained a significant share of the cryptocurrency market, peaking at 62% of total on-exchange crypto trades during the first quarter. This accomplishment was partly attributed to a zero-fee promotion for popular trading pairs. However, once this promotional period ended, Binance’s market share gradually decreased to 51% by the end of the third quarter, as reported by research firm CCData.
Despite these challenges, Binance has found itself increasingly isolated from the traditional financial system. The Securities and Exchange Commission (SEC) filed a lawsuit against Binance in June, and earlier in the year, the Commodity Futures Trading Commission (CFTC) pursued regulatory action against the exchange, citing violations related to access for US users, inadequate anti-money laundering controls, inflated trading volumes, and mishandling of client assets. Binance vehemently disputes these allegations and is currently defending itself in court.
In June, Bloomberg’s wealth index devalued Binance’s US exchange to zero after it announced it would cease transactions in dollars, leading to a significant reduction in trading volumes. Previously valued at $4.7 billion in a funding round in March 2022, Binance.US saw Zhao’s net worth peak at an impressive $96 billion in January of the same year.
The challenges faced by Binance are not unique, as regulatory uncertainty and rising interest rates have made alternative investments more appealing within the cryptocurrency industry. For instance, Coinbase Global Inc. witnessed a 52% decrease in spot trading volume in the third quarter compared to the previous year, according to CCData.
