Binance CEO's Net Worth Plummets Amid Falling Trade Volumes and Regulatory Lawsuits
Summary:
Binance CEO Changpeng "CZ" Zhao's net worth has significantly declined by $11.9 billion due to falling trading volumes at his exchange. This resulted in his demotion on the world's billionaire list, with the Bloomberg Billionaires Index cutting Binance's revenue estimates by 38%. Adding to these issues, Binance now faces lawsuits from both the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over allegations of operating illegally and mishandling customer assets. These factors, among others, have impacted Binance's spot trading market share, causing it to drop over seven consecutive months to 34.3%.
Significant losses have been experienced by Binance co-founder and CEO, Changpeng "CZ" Zhao, as his net worth took a massive nosedive by $11.9 billion due to declining exchange trading volumes. As per the updated data from Bloomberg Billionaires Index on October 26, Binance's income predictions were reduced by a significant 38% due to a slump in trading volumes, causing a demotion of Zhao to the 95th position on the world's billionaire list. His net worth has dwindled down to a mere $17.3 billion, a whopping 82% plunge from its apex at $96.9 billion in January 2022, when he stood at an impressive 11th place among global billionaires.
The estimation of Binance’s revenues was done by Bloomberg relying on the spot and derivatives trading information gathered from crypto data platforms, CoinGecko and Coinpaprika. The exchange repeatedly observed its share in spot trading decline for seven successive months until September, settling at 34.3%. In January, Binance's spot market share was well over 55%. Binance.US, the exchange's US-based branch, also reported new lows for its trading volumes in the past month.
Pivotal factors contributing to Zhao's drastically shrinking net worth and Binance's dwindling exchange volumes include lawsuits filed by both the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. Allegations were made against Zhao, Binance, and Binance.US in June, accusing them of illegal operation, selling unregistered securities, and improper handling of customer assets. Zhao, in his capacity as their "controlling person," was personally implicated in these lawsuits. Earlier in March, the CFTC filed a lawsuit asserting that Binance failed to appropriately register with the regulator. Zhao and Binance completely deny these accusations and strive to have both lawsuits thrown out.
Despite these dramatic losses, they still don't compare to the financial blows suffered by Zhao's former competitor in the crypto market, Sam Bankman-Fried, whose $16 billion fortune was virtually wiped out after FTX announced a serious liquidity issue just days before declaring bankruptcy in November 2022. Some speculate that this crisis was prompted by a tweet from Zhao, in which he revealed Binance's decision to divest its holdings in FTX's Token (FTT), causing a large-scale withdrawal from FTX. Although Zhao initially proposed to purchase the ailing exchange, he retracted his offer less than two days later.
Bankman-Fried, who vehemently denies the charges, appeared before the court in his personal criminal trial on October 26, pleading not guilty to two counts of fraud and five conspiracy charges.
Published At
10/27/2023 5:17:30 AM
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