Binance, once a crypto juggernaut, has suffered a remarkable fall from grace, epitomized by its co-founder and CEO, Changpeng Zhao. The company’s fortune, valued at nearly $97 billion in January 2022, has since plummeted by over 80%, sending shockwaves through the crypto industry.
As of October 2023, Binance’s revenue estimates were downgraded by a staggering 38% by the Bloomberg Billionaires Index. This dramatic shift has had a profound impact on CZ’s net worth, which has dwindled by $11.9 billion. Zhao, once the 11th richest person globally, now languishes in 95th place on the rich list, with a significantly reduced net worth of $17.3 billion.
The catalyst for this decline is the substantial drop in trading volumes at the exchange. The exchange’s spot market share fell from over 55% in January to just 34.3% as of September. Binance.US, its U.S.-based arm, faced similar challenges, witnessing dwindling volumes. This decline in trading activity was exacerbated by the legal troubles that have plagued the exchange.
Binance Battles Legal Storm: SEC and CFTC Showdown
Binance has been embroiled in legal battles with both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC accused Binance and CZ of operating illegally, selling unregistered securities, and mishandling customer assets, with Zhao labeled as the “controlling person.” The CFTC’s lawsuit, filed in March, contended that the exchange had not properly registered with the regulator. Binance and Zhao vehemently deny these allegations and are actively seeking to dismiss both lawsuits.
This downfall is reminiscent of CZ’s rival, Sam Bankman-Fried, whose $16 billion fortune was nearly obliterated in November 2022 when FTX, the exchange he co-founded, disclosed a liquidity crisis and subsequently filed for bankruptcy. Some attribute this crisis to CZ’s tweet announcing Binance’s sale of FTX Token (FTT) holdings, triggering a mass exodus of funds from FTX. Zhao initially attempted to acquire the troubled exchange but withdrew less than 48 hours later.
As CZ navigates this turbulent period, Sam Bankman-Fried finds himself on the witness stand, defending against criminal charges related to fraud and conspiracy. Both CEOs, once symbols of crypto success, now face adversity that could shape the future of their respective empires and the broader cryptocurrency industry.
In a rapidly evolving crypto landscape, the meteoric rise and fall of Binance serve as a stark reminder of the industry’s volatility and the potential consequences of regulatory scrutiny.