It has been a long few weeks since the cryptocurrency crowd was partying in Miami.
Coinbase Global founder and chief executive Brian Armstrong had a personal fortune of $13.7 billion as recently as November and about $8bn at the end of March.
That is now $2.2bn, according to the Bloomberg Billionaires Index, after a sell-off in digital currencies — from Bitcoin to Ether — triggered a precipitous decline in the market value of Coinbase, the largest US cryptocurrency exchange.
The company's shares have tumbled 84 per cent since their first day of trading in April 2021, closing Wednesday at $53.72 after it said trading volume and monthly transacting users were expected to be lower in the second quarter than in the first.
This raised questions about Coinbase’s ability to withstand the sharp decline in cryptocurrency prices, forcing Mr Armstrong to take to Twitter to defend the company.
He said users' funds were safe as there was “no risk of bankruptcy” even amid a “black swan” event.
Then there is Michael Novogratz, chief executive of cryptocurrency merchant bank Galaxy Digital, whose fortune has plummeted to $2.5bn, from $8.5bn in early November.
He has been a champion of TerraUSD, the algorithmic stablecoin that is now at risk of complete collapse amid a breakdown in the price of Luna, a cryptocurrency token in the same ecosystem.
“I am probably the only guy in the world that has got both a Bitcoin tattoo and a Luna tattoo,” Mr Novogratz said at the Bitcoin 2022 conference in Miami on April 6.
Billionaire cryptocurrency fortunes that swelled over the past two years are disappearing after a sell-off that began with technology stocks spilled over into digital money.
Bitcoin, the most popular cryptocurrency, and Ether have both fallen by more than 50 per cent since their record highs late last year.
While almost all cryptocurrency holders have suffered wealth declines, some of the biggest and most visible losses are concentrated among founders of exchanges, where traders buy and sell digital currencies.
At least on paper, Changpeng Zhao, the chief executive of closely held Binance, has lost an even larger fortune than Mr Armstrong or Mr Novogratz.
He made his debut on the Bloomberg wealth index in January with a net worth of $96bn, one of the world’s largest.
By Wednesday that had shrunk to $11.6bn, using the average enterprise value-to-sales multiples of Coinbase and Canadian cryptocurrency company Voyager Digital as a basis for the calculations.
Cryptocurrency exchanges in the US appear to be suffering more of a downturn than their global competitors.