Jai Sahu
Changpeng Zhao continues to dominate Forbes’ roster of cryptocurrency billionaires. What is the secret behind his immense wealth?
Changpeng Zhao has consistently ranked among the richest individuals, despite facing legal challenges and accruing billions in fines in 2023. In early April, Forbes refreshed its billionaire roster, showcasing 17 figures from the crypto sector. Once more, the founder and ex-CEO of Binance clinched the top spot, boasting a fortune estimated at $47.7 billion.
Gaining from Binance’s Triumph
In 2017, Changpeng Zhao introduced Binance Coin (BNB), distributing $200 million worth of BNB. Since its debut, Binance Coin’s value has skyrocketed, with its current price hovering around $540. Possessing a market cap near $80 billion, BNB is the fourth-largest cryptocurrency.
After five funding rounds, Changpeng Zhao secured a significant, yet undisclosed, share of Binance, with $3 billion invested in total. Consequently, his net worth soared to $100 billion by 2022.
Moreover, the exchange was actively pursuing acquisitions. In an April 2021 Bloomberg interview, Zhao outlined his strategy:
“We aim to undertake about 20 to 30 acquisitions annually. Most are minor, and go unannounced. A few will be larger, like CMC, but we expect to execute around 30 each year, translating to roughly three deals per month now.”
Changpeng Zhao, founder and former CEO of Binance
This comment refers to Zhao’s early 2020 purchase of a cryptocurrency data tracking website, though the buying price remains undisclosed. Zhao expressed that this initiative was meant to diversify Binance’s operations.
Per Business of Apps, Binance has reaped significant profits, posting annual revenues of around $5.5 billion in 2020, $20 billion in 2021, and $12 billion in 2022.
However, the unregulated expansion of both the broader crypto market and Binance came to a halt in 2023. From a 55% market dominance, Binance saw a reduction in on-chain activities, leading to diminished reserves and trading volumes. Regulatory challenges brought its market dominance down to 32%, though it rebounded to 48% by January.
Amid legal complications, the company’s valuation fell, reducing Zhao’s net worth to $40 billion. After stepping down as Binance CEO, CZ agreed to a $50 million fine, and the company consented to pay $4.3 billion in fines and settlements. Nevertheless, Zhao’s control over the company remains intact unless he divests most of his stake.
Zhao’s Additional Assets and Investments
The bulk of Changpeng Zhao’s wealth stems from his stakes in Binance and his investments in BNB and BTC cryptocurrencies. In addition to these, he holds various other assets.
Real Estate
Changpeng Zhao possesses at least two properties in Dubai, a city he appreciates for its “very pro-cryptocentric” stance. The crypto mogul lauded Dubai for its conducive business climate and purchased property there as a testament to his dedication to the city. This represents a shift from his previous viewpoint, as he once noted his avoidance of cars or real estate due to their lack of liquidity.
FTX and Twitter
Changpeng Zhao’s ventures beyond Bitcoin, BNB, and Binance remain mostly unexplored. However, in 2019, he invested in the competing cryptocurrency exchange FTX, initiated by the infamous fraudster Sam Bankman-Fried, who was once a prominent and wealthy crypto figure but now faces imprisonment awaiting fraud sentencing.
Zhao exited FTX in 2021, withdrawing $2.1 billion, a move that proved prudent as FTX imploded in 2022, affecting the entire crypto landscape.
He also invested $500 million in Elon Musk’s $44 billion purchase of Twitter, not as a personal investment but as part of a corporate strategy.
In a November 2021 interview with the Associated Press, Zhao mentioned that the majority of his fortune is tied up in cryptocurrencies, notably Bitcoin and BNB. If he maintained these assets through 2023, he likely saw gains towards year-end as the crypto market began to recover from its slump, and Bitcoin’s value increased.
Financial Setbacks Owing to the SEC
In June 2023, the U.S. Securities and Exchange Commission (SEC) initiated legal action against Binance, accusing the firm of evading regulations that barred U.S. users from its services. The SEC also alleged that Binance lacked adequate anti-money laundering measures, inflated trading volumes, and mishandled client funds. Binance contested these allegations in court.
Consequently, the Bloomberg Wealth Index reduced Binance.US’s valuation to zero in June 2023 after it ceased dollar transactions, substantially lowering trading volumes. Previously, Binance.US had been valued at $4.7 billion in March 2022, and Changpeng Zhao’s (CZ) net worth had peaked at $96 billion in January that same year. His wealth then plummeted by 82% at one point.
By October 2023, Bloomberg noted that tightening regulations in the crypto sector and a market downturn further diminished CZ’s fortune to $17.2 billion.
Restoring Zhao’s Wealth
By 2023’s end, Zhao’s wealth surged anew. Bloomberg journalists remarked in late last year that the estimated personal capital of Binance’s founder and former head rose to $37.2 billion amid the market’s rebound.
This figure remains below his January 2022 high of $96.6 billion and just above the $50 billion he possessed in June. However, CZ’s wealth increased by nearly $25 billion since January, over five times the $4.3 billion Binance agreed to pay in a November settlement with the U.S. Department of Justice.
In calculating CZ’s wealth, Bloomberg experts factored in his 90% ownership in Binance and 86% stake in the American division of Binance.US. The entrepreneur also disclosed investments in Bitcoin and BNB, though their amounts are unspecified and excluded from the total valuation. The confidence level in the accuracy of his wealth assessment is at its lowest.
Undisclosed Earnings of a Noted Exchange
While specific details on the profits and assets of Binance’s founder, Changpeng Zhao, remain private, he is widely recognized as the richest individual in the cryptocurrency industry. Despite Binance’s financial specifics being largely confidential, the exchange nearly monopolizes 50% of the market share, implying its earnings might far surpass those of its rivals. As the principal shareholder, Zhao stands to gain significantly from Binance’s success.
Additionally, the cryptocurrency market’s recovery typically benefits all sector participants. Though Binance hasn’t released recent profit figures amid the market’s upswing, it’s plausible to suggest that Zhao’s wealth has not only been preserved but has also increased due to the growth in market share, Bitcoin, and the overall market capitalization of digital assets.