Recent reports indicate a significant reduction in the personal wealth of Binance founder, Changpeng “CZ” Zhao. With a decline of $11.9 billion, his current net worth stands at an estimated $17.2 billion.
This financial shift correlates with Binance’s decreasing trading volumes throughout the year, reflecting broader challenges in the cryptocurrency exchange market.
The decline in Zhao’s wealth is closely tied to the performance of Binance. The exchange, once a dominant force in the crypto trading world, has seen a consistent drop in its trading volumes throughout the year.
This decline has been so pronounced that the Bloomberg Billionaires Index recently adjusted its revenue expectations for Binance, marking a 38% reduction.
The reasons behind Binance’s dwindling fortunes are multifaceted. One significant factor is the decision by Binance.US, the American arm of the exchange, to cease trading in US dollars. This move resulted in a sharp contraction in trading volumes.
Furthermore, in March 2022, Binance.US was valued at $4.7 billion during a funding round, a stark contrast to CZ’s net worth, which peaked at a whopping $96.9 billion in January of the same year.
Another contributing factor to Binance’s challenges has been regulatory scrutiny. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission have both initiated lawsuits against the exchange. The SEC’s lawsuit, filed in June, alleges that Binance and Binance.US operated without proper authorization, engaged in the sale of unregistered securities, and mishandled customer assets.
Zhao, given his pivotal role in the company, was named as the “controlling person” in these allegations. While Binance and Zhao have refuted these claims and are seeking to dismiss the lawsuits, the legal battles have undoubtedly cast a shadow over the exchange’s operations and reputation.
The crypto world is no stranger to volatility, and Binance’s current challenges underscore the unpredictable nature of the industry. For instance, Sam Bankman-Fried, a notable figure in the crypto space, saw his $16-billion fortune vanish in November 2022 after FTX, another major crypto exchange, revealed its liquidity issues shortly before declaring bankruptcy.