How the cryptocurrency implosion affected the net worth of industry leaders

Ten lost their billionaire status this year, according to Forbes’ estimates

FTX chief executive Sam Bankman-Fried told media outlets before his arrest that his bank balance was down to $100,000. EPA
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Seventeen of the cryptocurrency industry’s wealthiest investors and founders have collectively lost an estimated $116 billion in personal wealth since March, according to Forbes.

Fifteen of them lost more than half their wealth over the past nine months while 10 lost their billionaire status altogether, Forbes reported.

Before he was arrested in the Bahamas, FTX co-founder and chief executive Sam Bankman-Fried, who was once ranked the industry’s second-wealthiest person worth $24 billion by Forbes magazine in April, told media outlets that his bank account was down to $100,000 and that he was “not sure” how he would pay his lawyers.

The fortune of Gary Wang, FTX’s other co-founder and former chief technology officer, was once estimated at $5.9 billion but has since been wiped, Forbes reported.

Mr Bankman-Fried co-founded FTX with Mr Wang in 2019. He also founded Alameda Research in 2017, a cryptocurrency trading company.

This year was characterised by wealth destruction in the cryptocurrency and blockchain sector. Investors fled risky assets such as digital currencies in an environment of inflation and rising interest rates.

The “crypto winter” has been exacerbated by the collapse of "stablecoin" TerraUSD and its sister token Luna, as well as the bankruptcy filing of US cryptocurrency lending platform Celsius Network.

In June, Bitcoin dropped below the key $20,000 level for the first time since December 2020 after peaking at $69,000 in November 2021, while about $2 trillion has been wiped from the market value of cryptocurrencies since late last year, according to data compiled by CoinGecko.

The net worth of Changpeng Zhao, the chief executive of Binance, the world’s biggest cryptocurrency exchange, has also plummeted this year.

He is now worth $12.7 billion and is the world’s 138th-richest person, according to the Bloomberg Billionaires Index.

CZ, as he is known, has an estimated 70 per cent stake in Binance, which Forbes values at $4.5 billion — down from $65 billion in March.

The collapse of Mr Bankman-Fried’s net worth came after Mr Zhao stoked speculation about the financial health of FTX in a tweet on November 6, which snowballed into $6 billion of withdrawals from the exchange in 72 hours, Reuters reported.

However, Mr Zhao must now contend with the consequences. That could include the clawback in bankruptcy court of the more than $2.1 billion that Binance made from selling its stake in FTX back to Mr Bankman-Fried in the summer of 2021, according to Forbes.

Meanwhile, the net worth of Barry Silbert, head of cryptocurrency conglomerate Digital Currency Group, has also nosedived this year.

One of DCG’s key assets, cryptocurrency lending unit Genesis Global Capital, owes creditors at least $1.8 billion, Reuters reported earlier this month.

DCG is saddled with debt. It assumed a $1.1 billion liability from Genesis, which stemmed from a bad loan Genesis made to the now-bankrupt Three Arrows hedge fund, Forbes reported.

Separately, DCG owes Genesis another $575 million, which is due in May.

For these reasons, Forbes estimates the current value of Mr Silbert’s 40 per cent stake in DCG to be approximately $0.

The difficulties at Genesis have also buffeted the fortunes of billionaire Winklevoss twins, Tyler and Cameron, owners of the Gemini cryptocurrency exchange, whose net worth fell to $1.1 billion each, from $4 billion in March, Forbes reported.

The net worth of Brian Armstrong, chief executive of publicly traded exchange Coinbase, plummeted to $1.5 billion from $6 billion in March.

The company’s stock is down 64 per cent since August and more than 95 per cent from its $100 billion initial public offering in April 2021, according to Forbes.

Coinbase’s other co-founder, Fred Ehrsam, also got burnt by Mr Bankman-Fried. His cryptocurrency venture company Paradigm invested $278 million in FTX equity and subsequently his net worth is currently down to $800 million, from $2.1 billion in March, according to Forbes' estimates.

Jed McCaleb, co-founder of crypto company Ripple, is believed to be the only person who has managed to retain most of his fortune through the downturn, because he sold out almost entirely before the crash.

Mr McCaleb offloaded about $2.5 billion worth of XRP, Ripple’s native token, between December 2020 and July 2022, Forbes said.

Chris Larsen, Ripple’s other founder and its chairman, has lost more than $2 billion this year, due to XRP’s declining price.

Tim Draper, a venture capitalist who holds around 30,000 Bitcoins, dropped from the billionaire ranks earlier this year when the digital token hit $33,000. He is now worth $550 million, according to Forbes.

Updated: December 27, 2022, 3:30 AM