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Key Takeaways

Changpeng (CZ) Zhao, the co-founder and former CEO of Binance, the largest cryptocurrency exchange platform in the world, has ascended to the pinnacle of wealth in the crypto sphere.

In its latest report, published on June 14, 2024, Forbes magazine estimates that CZs total assets have reached $61 billion.

The newest valuation catapults CZ as the 24th richest individual globally, just behind Julia Koch and her family. The next wealthiest figure in the crypto world is Coinbase founder Brian Armstrong, with a net worth of $11 billion.

The analysis furthermore reveals that CZ holds approximately 94 million BNB, accounting for 64% of the total circulating supply of this cryptocurrency. This concentration of power and wealth raises questions about the principles of decentralization, a cornerstone of the crypto universe.

In addition to his massive BNB reserves, the report highlights that the bulk of CZs enormous fortune, estimated at $33 billion, stems from his commanding 90% ownership of Binance, which is valued at about $37 billion.

Furthermore, it is believed that CZ controls nearly 52 million additional BNB tokens spread across various affiliated wallets, further consolidating his influence within the Binance ecosystem.

According to the report, CZs recent increase in net worth is attributed to two main factors:

Firstly, his 90% equity stake in Binance, the large cryptocurrency exchange, is currently valued at $33 billion. This valuation persists despite CZ stepping down as CEO in November 2023 as part of a settlement with the US Department of Justice, where he pled guilty to charges of anti-money laundering and sanctions violations.

Although Binance was fined $4.3 billion by the government, the impact on Zhaos personal wealth was comparatively mild, as he was required to pay only a $50 million fine.

In the six months following his plea, Binance not only maintained but actually increased its dominance in the global market for crypto exchanges in terms of trading volume.

Data from The Block indicates that its share of the total spot market across exchanges rose to 42% from an average of 38% in the two months prior to his settlement. Notably, this growth occurred even though Binance was excluded from Forbes list of the most trustworthy crypto exchanges.

The second component of CZs wealth is less transparent. An investigation carried out by Forbes in collaboration with Gray Wolf in October 2023 revealed that Binances initial coin offering (ICO) was undersubscribed, leading CZ and his company to divert the unsold shares to wallets under his control.

In 2017, Binance reported selling 100 million BNB tokens at $0.15 each, thereby raising a total of $15 million. However, the investigation from last fall indicated that no more than 10.8 million BNB were actually sold, generating less than $5 million. This discrepancy highlights significant opacity in the allocation of Binances initial token distribution.

Binance Coin (BNB) serves as the native cryptocurrency of Binance, which ranks among the worlds largest cryptocurrency exchanges. Originally, BNB was designed to streamline the trading process on the platform.

Initially, BNB was launched as an ERC-20 token on the Ethereum blockchain but later transitioned to its own blockchain, known as Binance Chain. The initial total supply of BNB was set at 200 million coins. To help maintain the coins value stability, Binance conducts regular coin burn events, which involve the permanent destruction of coins to reduce the overall supply.

The utility token, BNB, has a capped supply of 200 million, with more than 153 million tokens currently circulating in the market.

With a current price of $595 per token, BNBs market capitalization exceeds $87,7 billion. The token has experienced a significant bull run, with its price more than doubling from January 2024 lows of around $290 to a peak of $724 in June.

Binance Coin (BNB) is a cryptocurrency that leverages smart contracts to manage the issuance, trading, and movement of tokens, thus enhancing the security and transparency of transactions. It operates on Binance Chain, a proprietary blockchain developed by Binance specifically for fast and efficient trading. The platform utilizes a Delegated Proof of Stake (DPoS) consensus algorithm, which ensures it operates swiftly and efficiently, typically with minimal issues.

In November, Zhao reached a settlement with the US government to conclude a multiyear investigation into Binance. The settlement involved Binance paying $4.3 billion to the US Department of Justice. As part of the agreement, Zhao resigned as CEO of the company, and Binance committed to establishing a board of directors comprised of independent members along with compliance and audit committees.

On April 30, US federal judge Richard Jones sentenced Zhao to four months in prison, significantly less than the three years U.S. prosecutors had recommended. Zhao faced allegations of circumventing sanctions violations and facilitating money laundering.

A four-month prison sentence, coupled with billions of dollars in fines, may seem lenient to US authorities, considering they have been investigating the former executive and his cryptocurrency empire for six years. From 2018 to 2024, Binance was the focus of multiple investigations by several agencies, including the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

Since 2018, US authorities, starting with the Department of Justice, have scrutinized Binance for possible breaches of Anti-Money Laundering laws and sanctions, examining issues such as unlicensed money transmission and money laundering. In March 2021, the Commodity Futures Trading Commission further investigated whether Binance illegally offered crypto derivatives to U.S. customers without proper registration.

The US SEC has been actively investigating Binance, starting with Binance.US and its connections to trading firms Sigma Chain AG and Merit Peak, focusing on how these relationships were disclosed to users. In June 2022, the SEC launched another probe into Binance Holdings concerning its 2017 initial coin offering (ICO), examining whether there were sales of unregistered securities.

The Commodity Futures Trading Commission filed a lawsuit against Binance CEO Changpeng CZ Zhao, compliance chief Samuel Lim, and the exchange itself, citing seven counts of trading irregularities and market manipulation. At the time of these charges, Binance was handling daily trading volumes exceeding $8.5 billion. Zhao refuted the allegations, maintaining that the crypto exchange never engaged in profit-driven trading or market manipulation under any circumstances.

In May, the Department of Justice initiated another investigation into Binance, focusing on potential violations of US sanctions by allowing Russian users to access the cryptocurrency exchange. This investigation, led by the DOJs national security division, was part of a wider effort. Although Binance had limited its services in Russia following sanctions imposed in April 2022, the exchange continued its operations in the country until September.

The SEC filed charges against Binance and CZ for securities law violations, focusing on issues such as inadequate market oversight and potential wash trading. The allegations include claims that Binance failed to prevent US investors from using Binance.com and that Binance.US engaged in wash trading through its primary undisclosed market-making firm, Sigma Chain, owned by CZ.

Additionally, the suit alleged that funds from Binance and Binance.US were commingled into an account controlled by CZ-associated Merit Peak Limited. Following these charges, Binance.USs activities in the U.S. were significantly reduced after the SEC obtained an emergency restraining order against the exchange.

As investigations into the crypto exchange intensified, senior executives at Binance.US began to leave the company, triggering a wave of departures that spread across Binances global operations. Over the ensuing months, at least 10 key executives exited the company.

As the DOJ considered fraud charges against Binance, authorities were concerned about the potential for a bank run impacting consumers. To mitigate harm to customers, the DOJ was reportedly exploring alternatives to criminal charges, such as fines or non-prosecution agreements.

Binance.US laid off approximately a third of its workforce, around 100 employees, and CEO Brian Shroder also departed last September.

Furthermore, the SEC raised complaints in court about Binances lack of cooperation during the discovery process. The regulator reported that Binance.USs parent company provided unintelligible screenshots and unsigned, undated documents.

CZs resignation as CEO marked a pivotal moment following a $4.3 billion settlement with U.S. authorities, encompassing fines related to failures in maintaining an effective Anti-Money Laundering program. Richard Teng assumed the CEO role at Binance.

As part of the settlement addressing criminal and civil charges, Zhao admitted guilt to one felony charge, stating, I acknowledge my mistakes and take full responsibility. This is in the best interest of our community, Binance, and myself.

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Changpeng Zhao World's 24th Richest Man: Estimated $61 Billion Net Worth as Release Date Imminent - CCN.com