Changpeng Zhao named wealthiest man in crypto industry— Here’s why

Changpeng Zhao continues to lead Forbes’ list of cryptocurrency billionaires. How did he build his fortune?

Changpeng Zhao has remained one of the wealthiest people for several years, even with legal issues and billions in fines in 2023. In early April, Forbes updated its billionaire list, featuring 17 people from the cryptocurrency industry. Once again, the founder and former CEO of Binance topped the list with an estimated fortune of $47.7 billion.

Profiting from Binance’s success

In 2017, Changpeng Zhao launched Binance Coin (BNB), distributing $200 million in BNB. Since its launch, Binance Coin’s value has surged, with its price currently around $540. With a market capitalization of about $80 billion, BNB ranks as the fourth largest cryptocurrency.

After five rounds of funding, Changpeng Zhao acquired a significant but undisclosed portion of Binance, where $3 billion has been invested. As a result, his net worth was estimated at $100 billion in 2022.

Additionally, the exchange was actively engaged in acquisition. Zhao discussed this strategy in an April 2021 interview with Bloomberg.

“We plan to do somewhere between 20 and 30 acquisitions a year. Most are smaller acquisitions—we don’t announce them. Some will be bigger ones like CMC, but we do plan to do about 30 acquisitions each year, which probably means about three deals every month now.”

Changpeng Zhao, founder and former CEO of Binance

The statement refers to Changpeng Zhao’s early 2020 acquisition of a cryptocurrency data tracking site, though the purchase price was not revealed. Zhao stated that this move aimed to diversify Binance’s business.

According to Business of Apps, Binance has made substantial profits, reporting annual revenues of approximately $5.5 billion in 2020, $20 billion in 2021, and $12 billion in 2022.

However, the previously unregulated growth of both the broader crypto industry and Binance ended in 2023. Starting with a 55% market share, Binance experienced a decline in on-chain activities, which led to decreased reserves and trading volumes. Regulatory issues caused its market share to drop to 32%, though it recovered to 48% by January.

Due to legal issues, the company’s value decreased, reducing Zhao’s net worth to $40 billion. After resigning as CEO of Binance, CZ agreed to pay a $50 million fine, and the company offered to pay $4.3 billion in fines and compensation. However, Zhao’s control over the company remains unchanged unless he sells most of his stake.

Zhao’s other assets and investments

Most of Changpeng Zhao’s wealth comes from his ownership in Binance and his investments in BNB and BTC cryptocurrencies. Besides these, he also owns other assets.

Real estate

Changpeng Zhao owns at least two properties in Dubai, a city he admires for being “very pro-cryptocentric.” The crypto billionaire praised Dubai for its favorable business environment and bought property there as a sign of his commitment to the city. This is a change from his past stance, as he once mentioned that he avoided owning cars or real estate because he considered them too illiquid.

FTX and Twitter

Changpeng Zhao’s investments outside Bitcoin, BNB, and Binance have yet to be discovered. However, in 2019, he invested in rival cryptocurrency exchange FTX, founded by notorious fraudster Sam Bankman-Fried, who was once one of the wealthiest and most famous crypto entrepreneurs but is now in prison awaiting sentencing on fraud charges.

Changpeng Zhao left FTX in 2021, cashing out $2.1 billion, which proved wise as FTX collapsed in 2022, impacting the entire cryptocurrency industry.

He also invested $500 million in Elon Musk’s $44 billion acquisition of Twitter, not as a personal investment but as a corporate strategy.

In a November 2021 interview with Associated Press, Zhao said that most of his wealth is in cryptocurrencies, specifically Bitcoin and BNB. If he retained these assets through 2023, he likely profited towards the year’s end as the cryptocurrency market began recovering from a downturn, and Bitcoin’s value surged.

Financial struggles due to SEC

In June 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, accusing the company of bypassing regulations that prohibited U.S. users from accessing its services. The SEC also claimed that Binance lacked proper anti-money laundering measures, inflated its trading volumes, and mishandled client assets. Binance disagreed with the accusations and disputed them in court.

As a result, the Bloomberg Wealth Index slashed the value of Binance.US to zero in June 2023 after it announced it would no longer transact in dollars, sharply reducing trading volumes. Before this, Binance.US was valued at $4.7 billion in March 2022, and Changpeng Zhao’s (CZ) net worth had reached a high of $96 billion in January of the same year. His wealth then plummeted by 82% at one point.

By October 2023, Bloomberg reported that tightening regulations in the crypto industry and a market downturn had further reduced CZ’s fortune to $17.2 billion.

Restoring Zhao’s wealth

By the end of 2023, Zhao’s capital rose like a phoenix. Bloomberg journalists said at the end of last year that the estimated personal capital of the founder and former head of Binance increased to $37.2 billion amid the recovery of the cryptocurrency market.

This amount is still below his January 2022 peak of $96.6 billion and just above the $50 billion he had in June. However, CZ’s wealth increased by almost $25 billion since January. This growth is more than five times the $4.3 billion that Binance agreed to pay in a settlement with the U.S. Department of Justice in November.

In determining CZ’s wealth, Bloomberg experts relied on his 90% stake in Binance and 86% of the shares of the American division of Binance.US. The entrepreneur also announced investments in Bitcoin and BNB. However, their amount is unknown and needs to be included in the overall figure. The confidence rating in the accuracy of his capital assessment is at the lowest level.

Unknown profit of a known exchange

While the exact profits and assets of Binance’s founder, Changpeng Zhao, are not publicly disclosed, he is widely regarded as the wealthiest person in the cryptocurrency industry. Despite Binance’s financial details being largely private, the exchange commands nearly 50% of the market share, suggesting its profits could far exceed those of its competitors. As the owner of the company’s largest share, Zhao would benefit significantly from Binance’s success.

Moreover, the cryptocurrency market’s recovery typically favors all industry players. Although Binance has not released recent profit figures amidst the market’s upswing, it’s reasonable to assume that Zhao’s wealth has not only been preserved but has also grown due to the increase in market share, Bitcoin, and the overall capitalization of digital assets.