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Crypto Founder Says He's 'Poor Again' After $1.6 Billion Crash

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Crypto Founder Says He's 'Poor Again' After $1.6 Billion Crash

Chenpeng Zhao, the wealthy founder of cryptocurrency exchange Binance and until recently one of the 20 wealthiest people in the world, jokingly tweeted that he was 'poor again' this week after his company’s holdings crashed from more than $1.6 billion in value to a mere $2,200.

Zhao, more commonly referred to as ‘CZ’, earned his fortune thanks to his 90% ownership stake in Binance, which was founded in 2017 and quickly became the world’s largest crypto exchange after just eight months – a position it still maintains today.

Binance is an absolute titan in the financial industry (Credit: Alamy)
Binance is an absolute titan in the financial industry (Credit: Alamy)
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So just how big is Binance? At its peak in September 2021, the company routinely processed more than $50-80 billion in crypto transactions every single day, handling more than $34 trillion throughout the previous calendar year – nearly six times that of its closest competitor, Coinbase.

Needless to say, Binance is an absolute titan in the financial industry, with an annual revenue of around $20 billion.

Both the company and CZ’s personal fortunes have taken a massive hit this year, however, as a combination of inflation, the war in Ukraine, a looming recession and a decimation of the global stock and crypto markets have combined to take an unprecedented chunk out of the digital economy.

In a tweet on Monday, Zhao announced that Binance had been holding on to 15 million Luna tokens, received in exchange for a $3 million investment into the Terra network in 2018 that Luna is based on. Its Luna tokens were 'never moved or sold' as of Monday, according to Zhao.

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Zhao, more commonly referred to as ‘CZ’, earned his fortune thanks to his 90% ownership stake in Binance (Credit: Alamy)
Zhao, more commonly referred to as ‘CZ’, earned his fortune thanks to his 90% ownership stake in Binance (Credit: Alamy)

However, Zhao revealed this week that none of these tokens had been moved or sold since their acquisition by Binance, and that their value had shrunk from an estimated $1.6 billion when the token hit its peak price to a paltry $2,200 this week. Today the coin is trading at around $0.0001468 per token.

This implosion started when Luna's sister token, TerraUSD, lost its peg to the US dollar two weeks ago. The two tokens' valuations are tied to each other, which meant that when TerraUSD's price fell, investors rushed to dump their holdings of that token as it plummeted in value, which in turn, dragged down Luna's price. 

The two tokens' free fall was estimated to have wiped out more than $50 billion in paper value, taking out a huge chunk of Binace’s turnover and wiping out more than $80 billion from CZ’s personal fortune, slicing his net worth from around $97bn on New Year’s Day to ‘just’ $16bn in the blink of an eye.

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If confirmed, Zhao will hold the not-so-prestigious title of losing more money than anyone else in human history, inheriting the title from Japanese businessman Masayoshi Son, who lost more than $25 billion in 2016.

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Featured Image Credit: Alamy

Topics: News, Cryptocurrency

Tom Sanders

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