The cryptocurrency landscape is taking a toll on the fortunes of prominent industry figures, with Binance founder Changpeng Zhao, witnessing a substantial decline in his wealth.
As per the Bloomberg Billionaires Index, his estimated net worth plummeted by $11.9 billion, representing an 82% drop since its peak. His current fortune stands at $17.2 billion.
This substantial reduction in Zhao’s wealth is attributed to a 38% cut in the estimated revenues of Binance, a major cryptocurrency exchange.
Data revealed a decline in trading volumes at Binance throughout the year, contributing to this substantial financial setback.
The Bloomberg Billionaires Index determines Binance’s revenue based on spot and derivatives trading data from crypto-tracking services Coingecko and Coinpaprika.
The 46-year-old Zhao played a significant role in events surrounding another crypto figure, Sam Bankman-Fried.
In November, the Binance founder announced the liquidation of a token linked to FTX after reports emerged that Bankman-Fried’s hedge fund, Alameda Research, held a sizable position in it.
This led to a rush among FTX customers to withdraw their funds, overwhelming the exchange and eventually resulting in its bankruptcy less than a week later.
Bankman-Fried, who had reached a peak net worth of $26 billion in March the previous year, saw his fortune wiped out.
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Earlier in the year, Binance had gained a significant share of the crypto market, peaking at 62% of total on-exchange crypto trades in the first quarter.
This achievement was partly due to a zero-fee promotion for popular trading pairs.
However, once the promotion ended, Binance’s market share decreased to 51% by the end of the third quarter, as reported by research firm CCData.
Despite these challenges, Binance has found itself increasingly isolated from the traditional financial system.
The Securities and Exchange Commission filed a lawsuit against Binance in June, and earlier in the year, the Commodity Futures Trading Commission pursued regulatory action, citing violations related to access for US users, inadequate anti-money laundering controls, inflated trading volumes, and mishandling of client assets.
Binance vehemently disputes these allegations and is currently defending itself in court.
In June, Bloomberg’s wealth index devalued Binance’s US exchange to zero after it announced it would cease transactions in dollars, leading to a significant reduction in trading volumes.
Binance.US, previously valued at $4.7 billion in a funding round in March 2022, saw Zhao’s net worth peak at $96 billion in January of that same year.
The challenges faced by Binance are not unique, as regulatory uncertainty and rising interest rates have made alternative investments more appealing.
For instance, Coinbase Global Inc. witnessed a 52% decrease in spot trading volume in the third quarter compared to the previous year, according to CCData.