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How the richest cryptocurrency billionaire doubled his net worth behind bars
The Binance founder, known to cryptocurrency followers as CZ, is spending the summer in Santa Barbara’s Lompoc minimum-security prison. As cryptocurrency markets soar, Forbes reveals the secret source of its growing billions.
From Javier PazForbes staff e Steven EhrlichForbes Staff
Prison has been good for Binance founder Changpeng Zhao. Already the richest person to end up behind bars and the richest person in the cryptocurrency world many times over, Zhao’s net worth has soared since he became a criminal.
Forbes now estimates he is worth $61 billion, making him 24thh richest person in the world, immediately after Julia Koch and family. The second richest person in the cryptocurrency industry is Coinbase founder Brian Armstrong with $11 billion.
CZ’s upward revision has two components. First, his 90% stake in Binance, the large cryptocurrency exchange, is valued at $33 billion despite CZ stepping down as CEO in November 2023 as part of a settlement with the US Department of Justice in which pleaded guilty to anti-money laundering. and sanctions 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 he asked, Binance has actually increased its dominance among cryptocurrency exchanges worldwide in terms of trading volume (although it was excluded from Forbes’ list of the most trusted cryptocurrency exchanges.) According to data compiled by The Block, his share of the total spot market among exchanges increased to 42% in the six months after he left the company from an average of 38% in the two months before his settlement.
BNB AGAINST BITCOIN AND ETHEREUM
Year-to-date performance through 2024
The big change in CZ’s net worth comes from Forbes’ discovery of his personal holdings in his publicly issued BNB token, which we estimate to be 94 million tokens or 64% of the 147.5 million total BNB tokens in circulation. Forbes estimates that Binance owns 71% of BNB supply.
Despite the exchange’s legal problems, BNB has been in crisis in 2024, rising 100% far outpacing other major cryptocurrencies such as bitcoin (up 54%), ether (up 53%), and solana (up by 49%). BNB recently hit an all-time high of $714, with a market capitalization of $110 billion.
What is BNB? The 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 developers who run crypto projects and are similar to airline mile loyalty points compared to actual stock shares of a company, although they are traded on cryptocurrency exchanges like stocks and are sought after by investors. Tokens like BNB offer no ownership but reward holders, who are often customers, with discounts for trading or as an incentive to recruit new account holders. They are often used, in the words of a former FTX member, whose company led to its dramatic downfall of the FTT token, 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 stash in two ways. Binance was created in 2017 and he and the founding team received 80 million tokens from a total supply of 200 million BNB. Forbes’ forensic analysis of the wallets that received these tokens, conducted in collaboration with Gray Wolf Analytics, indicates that the company holds 46.2 million of the original 80 million tokens. CZ is credited with 41.6 million BNB from this amount due to its 90% ownership of Binance.
The second component of the Czech Republic’s wealth is more obscure. The results of an investigation published by Forbes and conducted with Gray Wolf in October 2023 revealed that Binance’s ICO was initially undersubscribed, which led CZ and his company to funnel unsold shares into portfolios he controlled. In 2017, Binance claimed to have 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, resulting in a net gain of less than $5 million.
BINANCE OWNERSHIP ON BNB
Current BNB supply: 147.5 million
In its official white paper, which in the cryptocurrency world functions 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 hold 58 million BNB, worth $35 billion at today’s price of $602. CZ’s 90% ownership of Binance would give it just over 52 million additional BNB. In total, we believe he holds nearly 94 million BNB tokens. Lawyers for Binance and CZ did not respond to our requests for comment on CZ’s holdings.
The Binance founder’s holdings are now worth $56.6 billion, but since there is little chance that Zhao could get close to that amount if he tried to sell, Forbes has applied a 50% liquidity discount to his stake. . BNB trading volume currently amounts to approximately $1.6 billion in tokens per day.
Despite claiming to have 200 million customers globally, very little is known about Binance’s internal workings (it has never been audited) and over 53% of all BNB trades take place on the Binance exchange. Over the past month, BNB has gained around 5%, which on paper equates to around $3 billion in earnings for the Binance founder. So while Zhao serves his four-month sentence, soaking up the California sun in the courtyard of Lompoc II Federal Penitentiary, he watches his billions of BNB grow.
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