Changpeng Zhao, the co-founder and CEO of Binance, has witnessed a significant decline in his net worth, dropping by a staggering $11.9 billion. This downturn comes as Binance, one of the world’s largest cryptocurrency exchanges, faces plummeting trading volumes and a series of regulatory challenges. CZ’s fortunes have fallen over 80% since its peak in January 2022, when he was ranked 11th among the world’s richest individuals, with a net worth of almost $97 billion. As of October 26, 2023, he now holds the 95th spot on the Bloomberg Billionaires Index, with a net worth of $17.3 billion.
Binance’s troubles are not limited to its CEO’s diminishing net worth. The exchange has faced twin lawsuits from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). In June, the SEC filed a lawsuit against Zhao, Binance, and its U.S.-based arm, Binance.US, alleging illegal operations, the sale of unregistered securities, and mishandling of customer assets. Zhao was specifically named as the “controlling person” in the lawsuit.
The CFTC followed suit in March, asserting that Binance had failed to properly register with the regulatory authority. Both Zhao and Binance vehemently deny the allegations from both regulatory bodies and are actively seeking to have the lawsuits dismissed.
Binance’s struggles extend beyond legal disputes, as the exchange’s market share in the spot trading sector has steadily declined. As of September, it had experienced seven consecutive months of falling market share, dropping to 34.3%. In January 2022, Binance boasted a spot market share of over 55%, highlighting a substantial loss in market dominance.
Binance’s United States-based arm, Binance.US, has also seen trading volumes hit new lows in recent months, further contributing to the overall challenges faced by the exchange.
Changpeng Zhao’s net worth decline is noteworthy, but it pales in comparison to the dramatic downfall experienced by his once-rival, Sam Bankman-Fried. In November 2022, FTX, the cryptocurrency exchange co-founded by Bankman-Fried, disclosed a liquidity crisis just days before filing for bankruptcy, effectively wiping out Bankman-Fried’s $16-billion fortune.
Some experts believe that the crisis was triggered by a tweet from CZ, where he announced Binance’s intention to sell its FTX Token (FTT) holdings. This announcement led to a wave of withdrawals from FTX. Initially, Zhao had expressed interest in acquiring the struggling exchange but abruptly withdrew his offer less than 48 hours later.
Bankman-Fried, facing severe financial setbacks, took the witness stand in his own criminal trial on October 26. He has previously pleaded not guilty to two counts of fraud and five counts of conspiracy, marking a turbulent chapter in his career.