The CEO and co-founder of Binance, Changpeng Zhao, has experienced a significant decrease in his net worth due to the decline in trading volumes. According to the Bloomberg Billionaire Index released on October 26, Zhao’s net worth has decreased by $11.9 billion, dropping from his previous $96.9 billion portfolio at the beginning of last year. Previously ranked 11th on the list of the world’s wealthiest individuals, Zhao now holds the 95th position with a net worth of $17.3 billion.
Fall of Former Crypto Exchange CEO
Meanwhile, Sam Bankman-Fried, the former CEO of FTX, a crypto exchange that competed with Binance, saw his once-valued net worth of $16 billion completely wiped out. Bankman-Fried is currently undergoing criminal and civil trials for his involvement in the collapse of FTX in November 2022, resulting in billions of dollars lost from the market.
Zhao’s decrease in net worth can be attributed to Binance’s 38% decline in trading volumes, which is a consequence of increased regulatory scrutiny of digital asset exchanges by authorities in the United States and globally. Bloomberg calculated Zhao’s net worth based on Binance’s spot and derivative trading volumes, as well as fees posted on the website, utilizing data from CoinGecko and Coinpaprika up until October 2023.
Binance, boasting 150 million users and recognized as the largest exchange by trading volume, has experienced a continuous decline in market share for seven months, even after the downfall of its competitor FTX. Experts believe that the drop in trading volumes can be attributed to the extended cryptocurrency market downturn, which has affected all sectors and has resulted in numerous bankruptcies and miner shortages. In January 2022, Binance’s trading volumes were over 55% higher following the previous year’s bull run that saw the price of Bitcoin (BTC) surge to over $64,000.
Regulatory Challenges and Lawsuits
Recently, Binance has faced lawsuits from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for allegedly providing trading services for unregistered securities, improper registrations, commingling of user assets, and marketing unregistered derivatives to the US markets. Despite denying these allegations, user confidence in the exchange’s regulatory practices has been shaken, particularly with the departure of top executives from the company and Binance’s withdrawal from the Russian market.
Binance.US, the entity responsible for operations in the United States, has also experienced a decline in trading volumes compared to the previous year. It is reported that Zhao holds an 86% stake in the US entity. Following the lawsuits, the company discontinued support for dollar transactions, resulting in a $1 billion loss for Zhao.
