Binance, once the crown jewel of cryptocurrency exchanges, has been rocked by significant challenges this year. Recent developments have not only affected the exchange's trading volumes but also took a substantial bite out of the fortune of its CEO, Changpeng “CZ” Zhao.
A Meteoric Fall from the Top
On October 26, Binance's projected revenue figures were significantly revised by the Bloomberg Billionaires Index. This came in the wake of a drastic 38% reduction in exchange volumes. Such a downturn has forced Zhao, the dynamic Binance co-founder and CEO, out of the elite circle of top global billionaires.
He now stands at the 95th position, witnessing his net worth shrivel by a whopping $11.9 billion. To offer some perspective on this nosedive, in January 2022, Zhao’s net worth was an astronomical $96.9 billion, placing him at the 11th rank among the world’s most affluent individuals.
Fast forward to the present, and that figure sits at a comparatively modest $17.3 billion, marking an 82% decline.
Trading Troubles and Legal Battles
Delving into the specifics, Binance's spot trading market share, as of September, receded for seven straight months, landing at 34.3%.
This is a far cry from its commanding 55% share in January. Adding to the woes, Binance.US, the American arm of the exchange, also grappled with dwindling volumes recently. However, diminishing trading volumes are just the tip of the iceberg.
Binance and Zhao are embroiled in lawsuits from two formidable US regulatory bodies - the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). In June, the SEC alleged that Zhao, Binance, and Binance.US were involved in illegal operations, selling unregistered securities, and mismanagement of customer assets.
They identified Zhao as the principal figurehead or the “controlling person” behind these actions. Earlier, in March, the CFTC’s suit had accused Binance of failing to register appropriately. Both Zhao and Binance remain defiant, vehemently denying all allegations.
They are currently pushing for the dismissal of both lawsuits. To add salt to the wound, Zhao's descent in fortune is further highlighted when compared to the calamity faced by his once-competitor, Sam Bankman-Fried. Bankman-Fried's $16-billion wealth was nearly obliterated in November 2022 after FTX unveiled a liquidity crisis, subsequently leading to its bankruptcy declaration.