Binance founder and CEO Changpeng “CZ” Zhao has seen his net worth get slashed by $11.9 billion after the Bloomberg Billionaires Index revised its revenue estimates for the world’s largest cryptocurrency exchange.
On October 26, the Billionaire’s Index cut Binance’s revenue estimates by 38% after data showed a significant drop in trading volumes on the exchange, amid regulatory sanctions against Binance.
Zhao’s Net Worth Slashed as Binance Loses Significant Share in Global Crypto Trading Volume
The move knocked CZ down to 95th place on the richest persons’ list. CZ’s net worth is now a paltry $17.3 billion after dropping a whopping 82% from the $96.9 billion peak in January of last year when he was ranked as the 11th richest person in the world.
Bloomberg’s index calculated the crypto exchange’s revenue using spot and derivatives trading data from crypto data aggregators CoinGecko and Coinpaprika.
Binance started the year off with a bang, gaining a fair amount of market share in the crypto trading sector, peaking at 62% of total global on-exchange token trades in the first quarter. This was made possible by the platform’s “zero-fee” promotion for popular trading pairs. However, once the promotional offer ended, Binance’s market share slid to 51% at the end of Q3 2023, according to data sourced by crypto research and analytics firm CCData.
However, the popular crypto exchange’s spot trading market share has been falling for seven consecutive months since its peak in March. As of September, the figure stands at just 34.3%. One main reason for the slump is Binance’s recent lockup with financial regulators around the world.
Binance US’s Market Value Falls to Zero After Getting on the Wrong Side of Regulators
In the United States, Binance is facing two separate lawsuits from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in relation to the operations of its US-based subsidiary, Binance US.
In June, the SEC sued Zhao, Binance, and Binance US, for allegedly operating in the country without necessary licensing, selling unregistered securities in the form of cryptocurrencies, and mishandling customer assets deposited on the platform.
Meanwhile, the CFTC went after the exchange in March for allowing US customers to access and execute trades on Binance’s international platform, which the agency said is a clear violation of federal law. The regulator also claimed that Binance and its subsidiaries lacked adequate money-laundering controls, inflated trading volumes on its platform, and had not properly registered its activities with the agency.
Binance and its chief executive have rejected both the regulators’ allegations and are seeking to dismiss the lawsuits.
Soon after the lawsuits came about, Bloomberg’s wealth index slashed the market value of Binance US to zero after the exchange announced that it would no longer transact in dollars and customers could not purchase or trade crypto in USD, leading to the platform’s trading volumes shrinking dramatically. At its height in March 2022, Binance US was valued at $4.7 billion.
Disgraced FTX Founder Sam Bankman-Fried Lost His Billionaire Status in 2022
But CZ’s drop in net worth is rather pale compared to his once chief rival Sam Bankman-Fried, the disgraced former billionaire founder and CEO of collapsed crypto exchange FTX. Bankman-Fried’s $16 billion fortune was effectively wiped out in November 2022 after his crypto empire, which included FTX and crypto hedge fund Alameda Research, revealed details of a liquidity crisis and mishandling of almost $10 billion in customer and investor funds just days before filing for bankruptcy.
CZ played a major role in how things unraveled at the once world’s third-largest crypto exchange. In November, the Binance CEO tweeted that his exchange was selling its $2 billion worth of holdings in FTX’s native platform token FTT. The move came after a bombshell report by crypto news outlet CoinDesk revealed that Alameda Research, a company that was believed to be a client of FTX’s, was managing customers’ assets and FTX’s external investments, and also owned and controlled a significant portion of the exchange.
This information was kept away from both customers and investors and only came out after the exchange announced that it was indeed facing liquidity issues. CZ’s decision to sell FTT holdings led to FTX customers rushing to withdraw their deposits from the exchange, causing a bank run that led to FTX suspending all activities on its platform as it could not handle the surge in withdrawals.
CZ had initially moved to purchase the embattled exchange but decided against it after discovering its history of financial mismanagement. That sent Bankman-Fried’s own fortune tumbling down to zero from its peak of $26 billion in March 2022.
Bankman-Fried, who is currently on trial for financial fraud in New York, was once considered the world’s youngest billionaire. Forbes Magazine went as far as to ridiculously claim that the conman was the “next Warren Buffet”.