It’s been a tumultuous year for the crypto market, and so has it been for crypto billionaires. According to a Forbes estimate, crypto billionaires this year lost a total of USD 116 billion.
In February this year, SBF was estimated at $24 billion and was the second richest person in crypto after Changpeng Zhao. However, SBF is now probably ruined. Before his trial began, he claimed to have only $100,000 in his bank account. FTX co-founder Gary Wang, who was also the company’s CTO, turned himself in to the SEC. His fortune was estimated at $5.9 billion earlier this year, which is now somewhere around $1,000.
What led to this massive loss for crypto billionaires?
A series of events occurred this year in the cryptoverse. First, the Terra sisters, TerraUSD collapsed. Then, hedge fund Three Arrows filed for bankruptcy in July. Voyager Digital, Celsius and BlockFi, interest-based lending companies, all declared bankruptcy. And the biggest of all was the FTX fiasco. The leading crypto-currency and market bellwether, bitcoin, has fallen 65 percent since its peak of $69,000 in November 2021. A total of $2 trillion in market value has meanwhile left digital assets to find a better market to invest in, leading to the downfall of many crypto-billionaires.
Changpeng Zhao, the biggest loser?
Binance CEO Changpeng Zhao has seen his fortune shrink from $65 billion to $4.5 billion and could lose more. Changpeng Zhao faces growing skepticism about centralized exchanges, particularly Binance, as well as ongoing investigations of him and his company by European and U.S. authorities over allegations that they helped facilitate money laundering and other financial crimes. Changpeng Zhao recently sought to convince Binance users that their crypto-currency deposits are properly backed by hiring accounting firm Mazars to create “proof of reserves“. These accounts, which exclude liabilities, have drawn sharp criticism for being inadequate, as they only give a partial picture of a company’s financial position. Mazars has since stopped working with crypto-currency companies, increasing the uncertainty surrounding Binance’s finances and the survival of the exchange.
The other billionaire losers in crypto:
At the center of the crypto-currency market’s spread is Barry Silbert, CEO of the crypto Digital Currency Group. According to a source, Genesis Global Capital, a strategic asset of DCG, owes at least $1.8 billion to its creditors, as Reuters reports. DCG is further saddled with debt, due to a problematic $1.1 billion loan Genesis made to the now-defunct hedge fund Three Arrows. DCG also owes Genesis $575 million, which is due in May. In addition, if Genesis goes bankrupt, DCG owes $350 million to the investment firm Elridge.
Brian Armstrong lost most of his fortune when Coinbase shares fell 64% since August and more than 95% since its $100 billion IPO in April 2021.
Fred Ehrsam, another co-founder of Coinbase, has been wronged by Bankman-Fried. His crypto investment firm Paradigm made a $278 million investment in FTX stock. Devin Finzer and Alex Atallah, the co-founders of OpenSea are no longer crypto-billionaires.
Based on early markdowns of their stakes in Alchemy, a crypto software company that runs other Web3 ventures, Nikil Viswanathan and Joe Lau have also left the three-comma club. Alchemy recently raised outside funding in February at a valuation of $10.2 billion.