Cybercrime pays off: Changpeng Zhao (CZ), the founder of the world’s largest crypto exchange, Binance, has seen a significant increase in his net worth, propelling it to nearly $50 billion. This increase of $8.42 billion has brought his year-to-date gains to a staggering $13.9 billion. According to the Bloomberg Billionaire Index, CZ‘s fortune expanded from $39.9 billion to $48.3 billion following Binance‘s share price rise from March 22, 2024, to March 25, 2024.
Cybercrime Facilitator Binance
The primary source of CZ‘s wealth is his controlling interest in Binance, which boasts over 150 million users globally. The exchange’s revenue, amounting to $9.8 billion, is primarily derived from its extensive spot and derivative trading volumes. In March 2024, an update in Binance‘s revenue led to an $11 billion increase in CZ‘s net worth, underscoring the significant growth of both Binance and its founder’s wealth in the dynamic cryptocurrency market landscape.
The results of investigations by U.S. authorities, including FinCEN and CFTC, have shown that Binance owes its dominance to its facilitation of cybercrime and terrorist activities. In this respect, the result of CZ‘s personal wealth must be seen as a result of Binance‘s facilitation of cybercrime.
Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history.”
U.S. Attorney General Merrick B. Garland (link)
Insights into Changpeng Zhao’s Crypto Empire
Zhao holds a significant 90% ownership stake in Binance, with this information publicly available in regions where ownership details are disclosed. His investment portfolio also includes Binance.US, an affiliated exchange within the United States, which, during a fundraising round in March 2022, was valued at $4.7 billion. Zhao’s estimated ownership stake in Binance.US stands at 86%.
However, Binance.US faced a downturn following a lawsuit by the U.S. Securities & Exchange Commission (SEC) in June 2023, leading to its shift to a crypto-only model and the discontinuation of dollar transactions. This shift resulted in the exchange’s valuation plummeting to zero, affecting Zhao’s overall fortune by a reduction of $1 billion.
Regulatory Challenges Facing Binance
Binance‘s interactions with the traditional financial system have been fraught with regulatory scrutiny and legal challenges. In June 2023, the SEC filed a lawsuit against Binance for various violations and regulatory failings.
No agreement or settlement has been reached between CZ, Binance, and the SEC. The SEC’s lawsuit was not part of the settlement reached by Binance and CZ with the U.S. authorities, including FinCEN and CFTC, in November 2023, which resulted in a record $4.3 billion payment. Both Binance and CZ have pleaded guilty to violating U.S. financial laws and conducting money laundering for cybercrime organizations and terrorist organizations.
CZ‘s sentencing is expected to take place on April 30, 2024. He is expected to be sentenced to prison and a large monetary fine. With his high wealth, the fine seems to be a lesser problem.
