NEWSLETTER
Chang Peng Zhao, widely known as CZ and founder of Binance, one of the largest cryptocurrency exchanges, has suffered a severe blow to his fortune. According to a recent Bloomberg crypto-trading-slump?sref=3REHEaVI” target=”_blank” rel=”nofollow”>reportCZ wealth plummeted by $12 billion due to the current decline in cryptocurrency trading activities.
According to the report, this decline was mainly attributed to a sharp drop in trading volumes on Binance throughout the year.
CZ’s financial losses
Bloomberg Billionaires Index revised its revenue estimates for Binance, cutting them by 38% after data revealed a decline in trading volumes on the stock market. As a result, CZ’s net worth now stands at $17.2 billion, a significant reduction from its previous valuation.
According to Bloomberg, CZ’s involvement in the recent events leading up to the FTX bankruptcy filing It further affected their financial situation. In November, CZ announced the liquidation of an FTX-pegged token (FTT) after reports emerged that Alameda Research, the hedge fund owned by Sam Bankman-Fritothe founder of FTX, held an important position in it.
The announcement sparked a rush among FTX clients to withdraw funds, overwhelming the exchange’s infrastructure. As a consequence, FTX declared bankruptcy in one week, erasing Bankman-Fried’s fortune, which had peaked at $26 billion in March of the previous year.
To estimate Binance’s revenue, the Bloomberg Billionaires Index relies on spot and derivatives trading data from cryptocurrency tracking services Coingecko and Coinpaprika.
Binance had witnessed a significant gain in market share earlier this year, reaching 62% of total crypto transactions on the stock exchange during the first quarter. However, after a zero-fee promotional period for popular trading pairs ended, Binance’s market share fell to 51% at the end of the third quarter, research firm CCData reported.
Binance value plummets as lawsuits and accusations take their toll
Binance has also faced increasing regulatory scrutiny, isolating itself from the traditional financial system. The Securities and Exchange Commission (SEC) filed a lawsuit against Binance in June, accusing the exchange of violating regulations.
Earlier this year, the Commodity Futures Trading Commission (CFTC) also took legal action against Binance for failure to comply with the rules that allowed American users to access the platform.
The allegations against Binance include inadequate anti-money laundering controls, inflated trading volumes and mismanagement of client assets. Binance has strongly disputed these claims and is currently challenging them in court.
In June, the Bloomberg Wealth Index reduced the value of US exchange Binance to zero after it announced a halt to dollar trading, resulting in a significant decline in trading volumes.
Binance.US had previously been valued at $4.7 billion during a funding round in March 2022, while CZ’s net worth peaked at $96 billion in January.
The challenges facing Binance are not unique, as regulatory uncertainties and rising interest rates have made alternative investments more attractive. Coinbase GlobalAnother major cryptocurrency exchange, saw a 52% decline in spot trading volume in the third quarter compared to a year earlier, according to Bloomberg.
Despite the personal wealth challenges CZ faces, Binance Coin (BNB) has capitalized on the overall market recovery, showing substantial gains over several time frames. The token is currently trading at $225.2, maintaining its bullish trend with a 2.2% increase in the last 24 hours.
Additionally, BNB has demonstrated significant gains of 5.8%, 9.6%, and 6.1% over the seven-, fourteen-, and thirty-day periods, respectively. These positive trends highlight the token’s strong performance in recent weeks.
Featured image of Binance, chart from TradingView.com
