Crypto moguls lose billions as crackdown widens
It was a great year for crypto billionaires — until this week.
The Securities and Exchange Commission’s crackdown on Binance and Coinbase — the largest crypto platforms in the world and the US, respectively — has upended the optimism that crept back into digital-asset markets after the miserable “crypto winter” of 2022.
Binance founder Changpeng Zhao has seen more than $2 billion wiped away from his net worth over the past two days.Credit: Bloomberg
Binance chief executive officer Changpeng Zhao, known as CZ, has seen his wealth shrink by $US1.4 billion ($2.1 billion) to $US26 billion over the past two days, while Coinbase CEO Brian Armstrong’s net worth has slumped by $US361 million to $US2.2 billion, according to the Bloomberg Billionaires Index. The SEC sued both companies for breaking securities rules, sending shares of several crypto-linked companies and tokens slumping.
It was yet another reversal in the fortunes of crypto’s wealthiest founders. Their combined net worth plunged in 2022, which was a year of high-profile blowups ranging from the algorithmic stablecoin TerraUSD to hedge fund Three Arrows Capital to Sam Bankman-Fried’s FTX.
But their fortunes soared by $US15.4 billion this year through Friday as the price of Bitcoin and other digital assets rebounded. Zhao’s fortune surged by 117 per cent before this week’s drop, while Armstrong’s jumped by 61 per cent. By comparison, the other billionaires on Bloomberg’s wealth index were up a combined 9 per cent.
Underpinning Bitcoin’s partial comeback this year were expectations that the US banking crisis that erupted in March would force the Federal Reserve to hit pause on rate increases. That allowed Bitcoin bulls to raise the case that the token stands to gain from lower real interest rates, and that it offers shelter from turmoil in traditional finance.
Brian Armstrong’s Coinbase is the latest crypto company to feel the sting of the SEC. Credit: Bloomberg
That may not matter if US regulators make it harder for the industry to operate and for Americans to trade.
In a lawsuit filed on Monday, the SEC alleged Binance and Zhao misled investors and regulators, mishandled customer funds and broke securities rules. Zhao, 46, co-founded the exchange in 2017 and grew it into a global giant. His personal net worth grew too, reaching a high of $US96.9 billion in January 2022.
