Changpeng Zhao remains at the top of Forbes’ cryptocurrency billionaires list, but how did he amass his fortune?
Despite facing legal challenges and hefty fines in 2023, Changpeng Zhao has consistently been among the wealthiest individuals for several years. In early April, Forbes released its latest list of billionaires, featuring 17 individuals from the cryptocurrency industry. Once again, the founder and former CEO of Binance, Changpeng Zhao, claimed the top spot with an estimated fortune of $47.7 billion.
The success story of Binance’s rise
In 2017, Changpeng Zhao introduced Binance Coin (BNB) by distributing $200 million worth of the coin. Since its inception, the value of Binance Coin has skyrocketed, currently trading at around $540. With a market capitalization of approximately $80 billion, BNB stands as the fourth largest cryptocurrency in the market.
Following five rounds of funding, Changpeng Zhao secured a significant stake in Binance, with a substantial investment of $3 billion. This investment propelled his net worth to an estimated $100 billion in 2022.
Furthermore, Binance actively pursued acquisitions as part of its growth strategy. In an interview with Bloomberg in April 2021, Zhao discussed the company’s acquisition of a cryptocurrency data tracking site in early 2020. This move was aimed at diversifying Binance’s business operations.
According to Business of Apps, Binance has reported significant profits, with annual revenues of around $5.5 billion in 2020, $20 billion in 2021, and $12 billion in 2022.
However, the unregulated expansion of the broader crypto industry and Binance came to a halt in 2023. Initially holding a 55% market share, Binance experienced a decline in on-chain activities, leading to reduced reserves and trading volumes. Regulatory challenges further impacted the company, causing its market share to drop to 32%, although it later recovered to 48% by January.
As a result of legal issues, the company’s value declined, reducing Zhao’s net worth to $40 billion. Following his resignation as CEO of Binance, CZ agreed to pay a $50 million fine, while the company offered to pay $4.3 billion in fines and compensation. Nevertheless, Zhao’s control over the company remains unchanged unless he decides to sell most of his stake.
Other investments and assets
Apart from his ownership in Binance and investments in BNB and BTC cryptocurrencies, Changpeng Zhao also holds other assets. He owns at least two properties in Dubai, a city he admires for its pro-cryptocurrency stance. Zhao praised Dubai for its favorable business environment and purchased property there to underline his commitment to the city.
Zhao’s investments extend beyond Bitcoin, BNB, and Binance. In 2019, he invested in the rival cryptocurrency exchange, FTX, founded by Sam Bankman-Fried. Zhao later cashed out $2.1 billion from FTX in 2021, a move that proved prescient as FTX faced collapse in 2022, impacting the entire cryptocurrency industry.
Furthermore, Zhao invested $500 million in Elon Musk’s $44 billion acquisition of Twitter as a corporate strategy, rather than a personal investment.
Financial challenges and recovery
In June 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, accusing the company of regulatory violations. The SEC alleged that Binance allowed U.S. users to access its services in violation of regulations, lacked proper anti-money laundering measures, inflated trading volumes, and mishandled client assets. Binance disputed these accusations in court.
Following the lawsuit, the Bloomberg Wealth Index reduced the value of Binance.US to zero in June 2023 after the announcement that the platform would no longer transact in dollars, resulting in a sharp decline in trading volumes. Prior to this, Binance.US was valued at $4.7 billion in March 2022, with Changpeng Zhao’s net worth peaking at $96 billion in January of the same year. However, his wealth plummeted by 82% at one point.
By October 2023, Bloomberg reported that Zhao’s fortune had further declined to $17.2 billion due to increased regulations in the crypto industry and a market downturn.
Restoring wealth
Despite facing financial setbacks, Changpeng Zhao’s fortunes began to rebound by the end of 2023. Bloomberg journalists noted that his estimated personal wealth had increased to $37.2 billion towards the end of the previous year, amid the recovery of the cryptocurrency market.
While this amount still falls short of his peak wealth of $96.6 billion in January 2022 and slightly above the $50 billion mark in June, Zhao’s wealth had surged by nearly $25 billion since the start of the year. This growth significantly exceeded the $4.3 billion settlement that Binance agreed to pay the U.S. Department of Justice in November.
Bloomberg experts based their assessment of Zhao’s wealth on his 90% stake in Binance and 86% ownership of Binance.US. Zhao’s investments in Bitcoin and BNB, although undisclosed, also contribute to his overall wealth. However, the accuracy of this assessment is considered low.
While the exact profits and assets of Binance’s founder remain private, Changpeng Zhao is widely regarded as the wealthiest figure in the cryptocurrency industry. Given Binance’s substantial market share, it is likely that Zhao’s profits surpass those of his competitors, despite the lack of public disclosure on the company’s financial details. As the largest shareholder of Binance, Zhao stands to benefit significantly from the success of the exchange.
As the cryptocurrency market continues to recover, Zhao’s wealth is expected to further grow, supported by Binance’s market share, Bitcoin’s performance, and the overall capitalization of digital assets.