- Binance founder Changpeng “CZ” Zhao experiences an 80% reduction in his net worth in 2023, despite the general cryptocurrency market showing signs of recovery.
- Binance faces intense regulatory scrutiny and legal battles, particularly in the United States, contributing to a decline in trading volumes and market share.
Binance and CZ: Navigating Troubled Waters
Despite the wider cryptocurrency market showcasing resilience and recovery in 2023, Changpeng “CZ” Zhao, the crypto billionaire and founding figure behind Binance, witnessed a drastic 80% reduction in his net worth since the year’s commencement.
A Rocky Journey Through 2023
Binance, a leading cryptocurrency exchange, found itself embroiled in turbulent waters on various fronts, especially in its interactions with the U.S. Securities and Exchange Commission (SEC) and numerous global regulatory bodies. Initially, the exchange managed to expand its market dominance, capturing 62% of total cryptocurrency exchange-based trades during 2023’s first quarter. This surge was significantly propelled by an attractive zero-fee promotion applied to several high-profile trading pairs. At this point in January 2023, CZ’s net worth impressively stood at $96 billion.
However, the situation took a drastic turn as the promotional period concluded. By the end of the third quarter, Binance’s market share witnessed a substantial dip to 51%, as reported by CCData, a research firm. Bloomberg data further highlighted a 38% drop in the company’s revenue as trading volumes significantly declined, a situation exacerbated by ongoing regulatory challenges. Consequently, the Bloomberg Billionaires Index data pinpointed a staggering $12 billion eradication from CZ’s net worth, leaving him with $17.2 billion.
Legal Battles and the Quest for Compliance
In recent months, Binance’s interaction with the traditional financial ecosystem has become increasingly strained.
June saw the exchange grappling with a lawsuit filed by the SEC. Earlier in the year, it also faced legal action from the Commodity Futures Trading Commission (CFTC), accusing Binance of regulatory non-compliance, which purportedly facilitated U.S. users’ access to the platform. The accusations extended to allegations of inadequate anti-money laundering measures, trading volume inflation, and improper handling of client assets. Binance stands firm, actively challenging these allegations in court.
Post the news of Binance U.S.’s decision to halt dollar transactions, Bloomberg’s wealth index recalibrated its valuation of the exchange to zero, culminating in a significant trading volume contraction. As of a funding round in March 2022, Binance U.S. was valued at $4.7 billion. In a strategic move to enhance transparency and possibly rejuvenate its standing, Binance U.S. is currently contemplating the addition of new altcoins to its listing.