Jail has been good to the founder of Binance, Changpeng Zhao. It’s already the richest person to go behind bars and the richest person in crypto many times. Zhao’s net worth has skyrocketed since he became a criminal.
Forbes estimate now what it’s worth 61 billion dollarswhich makes it the 24th richest person in the world, right after Julia Koch and her family. The next richest person in crypto is the founder of Coinbase, Brian Armstrongwith 11,000 million dollars.
CZ’s upward revision has two components. Firstly, his 90% stake in Binance, the large cryptocurrency exchange, is valued at 33 billion dollars despite CZ resigned as CEO in November 2023 as part of a deal with the U.S. Department of Justice in which he pleaded guilty to anti-money laundering. and penalties for violations. His company also paid a $4.3 billion fine to the government. However, the impact on Zhao’s personal wealth was less severe, as he only had to pay a fine of $50 million. In the six months since his statement, Binance has actually increased its dominance among crypto exchanges worldwide in terms of trading volume (although it was delisted from Forbes of the most trusted crypto exchanges). According to data compiled by The Blockhis share of the total spot market on exchanges has risen to 42% in the six months since he left the company from an average of 38% in the two months before his deal.
BNB AGAINST BITCOIN AND ETHEREUM
Performance so far in 2024
The big change in CZ’s net worth comes from Forbes’ discovery of his personal holdings in his exchange-issued BNB token, which we estimate to be 94 million tokens or 64% of the total 147.5 million BNB tokens in circulation. Forbes estimates that Binance owns 71% of the BNB supply.
Despite the exchange’s legal issues, BNB has been booming in 2024, surging 100% and far outperforming other major cryptocurrencies like bitcoin (up 54%), ether (up 53%), and solana (up 49%). BNB recently hit an all-time high of $714, giving it a market capitalization of $110 billion.
What is BNB? Binance coin or BNB was initially launched in 2017 as a fundraising tool for CZ to launch its new exchange. Tokens like BNB are created by the developers who run crypto projects and are similar to airline mile loyalty points than actual shares of a company, although they are traded on crypto exchanges like stocks and are sought after by investors. Tokens like BNB do not offer ownership, but reward holders, who are often customers, with trading discounts or as an incentive to recruit new account holders. They are often used, in the words of a former FTX member, whose company’s FTT exchange token caused its dramatic downfall, as a “form of shares because there is no public capital”. The Securities and Exchange Commission appears to agree, as it is currently suing Binance for selling BNB to US customers as an unregistered security.
Changpeng Zhao, 47, built up his BNB reserves in two ways. Binance was created in 2017 and it and the founding team received 80 million tokens out of a total supply of 200 million BNB. Forbes’ forensic analysis of the wallets that received these tokens, conducted in conjunction with Gray Wolf Analytics, indicates that lThe company owns 46.2 million of the original 80 million tokens. CZ is credited with 41.6 million BNB of this amount due to its 90% ownership of Binance.
The second component of CZ wealth is darker. The results of a research published by Forbes and conducted with Gray Wolf in October 2023 revealed that the Binance ICO was initially undersubscribed, leading CZ and his company to funnel unsold shares into wallets he controlled. In 2017, Binance claimed that he sold 100 million BNB for $0.15 each, raising a total of $15 million. Our analysis last fall showed that no more than 10.8 million BNB were sold, generating less than $5 million.
BINANCE BNB OWNERSHIP
Current BNB supply: 147.5 million
In its official white paper, which functions in the cryptocurrency world as a pseudo prospectus for ICO investors, Binance did not reveal what would happen to unsold tokens. Ultimately, forensic analysis shows that they were placed in wallets owned by Binance. Today, we estimate that these wallets contain 58 million BNB, worth $35 billion at the current price of $602. CZ’s 90% ownership of Binance would give him just over 52 million additional BNB. In total, we believe he owns almost 94 million BNB tokens. Lawyers for Binance and CZ did not respond to our requests for comment on CZ’s holdings.
The value of the Binance founder’s holdings would be $56.6 billion today, but since there is little chance Zhao could come close to that amount if he tries to sell, Forbes applied a 50% liquidity discount to his stake. Currently, BNB’s trading volume is approximately $1.6 billion worth of tokens per day.
Despite claiming to have 200 million customers worldwide, very little is known about Binance’s internal workings (it has never been audited) and over 53% of all BNB trades occur on the exchange itself. from Binance. In the last month, BNB has gained around 5%, which equates to about $3 billion in profits for the Binance founder on paper. So as Zhao serves his four-month sentence, soaking up the California sun in the courtyard of the Lompoc II federal correctional facility, he watches his billions of BNB grow.
