Changpeng ‘CZ’ Zhao, the CEO and co-founder of the Binance crypto exchange has seen his net worth slashed by a staggering $11.9 billion, a direct consequence of falling trading volumes at his exchange.
The Rise and Fall of CZ’s Net Worth
On Thursday, the Bloomberg Billionaires Index delivered a harsh blow to CZ and Binance. They slashed Binance’s revenue estimates by a significant 38%, reflecting a sharp decline in trading volumes on the exchange.
This dramatic downturn led to CZ tumbling to 95th place on the world’s list of the richest individuals, with his net worth reduced to a meager $17.3 billion. This marks an astonishing 82% drop from its peak of $96.9 billion in January 2022, when he was among the top 11 wealthiest people globally.
The Downfall of Trading Volumes
The primary reason behind CZ’s decline in wealth is the extraordinary decrease in trading volumes on Binance. Trading volumes are a critical gauge of an exchange’s financial health and are indicative of user activity and engagement. When trading volumes decline, it is a red flag signaling reduced revenue for the exchange.
As of September, the exchange’s spot trading market share had fallen for seven consecutive months to 34.3%. In January, Binance’s spot market share stood at over 55%. The decline in trading volumes has directly impacted the exchange’s profitability and, consequently, CZ’s net worth.
Binance’s Legal Troubles
Meanwhile, Binance has been grappling with lawsuits from two major U.S. regulatory bodies, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The SEC sued CZ, Binance, and Binance.US in June, alleging that the exchanges operated illegally, sold unregistered securities, and mishandled customer assets. CZ was specifically named as their “controlling person.”
On the other hand, the CFTC filed its lawsuit in March, claiming that Binance did not properly register with the regulator. While CZ and Binance vehemently deny the allegations, these lawsuits have cast a shadow of uncertainty over the exchange.
Comparisons to Sam Bankman-Fried
Markedly, CZ’s plummeting net worth stands in stark contrast to his once rival, Sam Bankman-Fried. In November 2022, Bankman-Fried saw his $16-billion fortune virtually wiped out after FTX, a crypto exchange he co-founded, disclosed a liquidity crisis just days before filing for bankruptcy.