According to Forbes’ estimates, the 17 wealthiest investors and creators in the crypto market have collectively lost an estimated $116 billion in personal worth since March. Over the previous nine months, fifteen have seen losses totalling more than half of their wealth. Some of them are no longer billionaires at all.
Post-pandemic economic fallout caused inflation and skyrocketing interest rates, draining investment away from the speculative crypto world. During this period, major companies collapsed, including TerraUSD, Three Arrows, Celsius, and many others.
The largest crypto, Bitcoin, is now 75% lower than when it peaked in November 2021 at $69,000. In the meantime, $2 trillion in market value has been lost. The fall of FTX was a fitting conclusion to a year of wealth destruction in the crypto and blockchain industries.
Sam Bankman-Fried was experiencing success in January 2022. His Bahamas-based FTX had recently secured $400 million from illustrious VCs at a $32 billion value. SBF appeared on Forbes’ annual list of the world’s billionaires, ranking second with a $24 billion net worth.
He is currently bankrupt and waiting for his trial. SBF informed multiple media sites that his bank account was down to $100,000. He was unsure how he would pay his attorneys before being detained in the Bahamas.
Crypto Exchange Binance & Its CEO Facing Skepticism
The next person with the most to lose is Changpeng Zhao, CEO of Binance, the biggest crypto exchange. According to estimates, CZ owns 70% of Binance, currently valued at $61 billion, and lost about $4 billion.
When CZ announced that Binance will sell its remaining FTT, the native currency of FTX, he led to the exchange’s demise. Customers quickly withdrew their money, which caused a run on FTX’s cash reserves.
A few days later, FTX filed for bankruptcy. Zhao beat his opponent, but now he must deal with the fallout. The nearly $2.1 billion that Binance gained from selling its investment in FTX back to SBF in the summer of 2021 might be recouped in bankruptcy court as part of this.
Authorities in Europe and the US are looking into CZ and his firm over claims that they helped facilitate money laundering and other financial crimes.
Recently, CZ has worked to convince users that their deposits are fully supported by hiring Mazars to provide “proof of reserves” reports. These statements, which don’t account for liabilities, have drawn heavy criticism. Since then, Mazars has stopped working with crypto firms.
On December 23, CZ said during a webinar that Binance had no liabilities. According to a rep for Binance, Forbes’ estimation of CZ’s net worth is not a crucial indicator for CZ. Making concrete use cases for crypto is very crucial.
An equity analyst at MoffettNathanson, a division of SVB Securities, Lisa Ellis, said:
I don’t believe a business can persist, operating in this amorphous way, not governed by anyone or anywhere, especially when it’s run by a public individual. Binance’s dodgy operating model would be a non-starter for many investors, public or private.