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Changpeng Zhao - CZ

Were you aware that billionaire founder of Binance doubled his wealth while behind bars? Binance's cryptocurrency, BNB, may be helping to increase the criminal's fortune.

Prison has been good for Binance founder Changpeng Zhao. Considered one of the richest people to go behind bars, Zhao's net worth has skyrocketed since he became a criminal.

In my opinion, he was a criminal long before that. Forbes now estimates he is worth $61 billion, making him the 24th richest person in the world, right after Julia Koch and her family.

Criminality seems to pay well. No wonder there are so many tricksters and shysters out there. Another person who might have his hands under the table is the next richest person in the cryptocurrency industry; Coinbase founder Brian Armstrong with $11 billion.

The upward revision of CZ's equity has two components. First, his 90% equity stake in Binance, which 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. 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 $50 million fine. In the six months since its guilty plea, Binance has actually increased its dominance among cryptocurrency exchanges in terms of trading volume.

According to data compiled from The Block, his total spot market share among exchanges increased to 42% in the six months since he left the company, compared to an average of 38% in the two months before his deal.

The big change in CZ's net worth comes from Forbes' discovery of his personal holdings in the BNB token issued by his exchange, which we estimate to be 94 million tokens or 64% of the 147.5 million BNB tokens in circulation. Forbes estimates that Binance owns 71% of the BNB supply.

Despite the exchange's legal troubles, BNB performed impressively in 2024, soaring 100%, vastly outperforming other prominent cryptocurrencies such as bitcoin (up 54%), ether (up 53%), and solana (up 49%). Recently, BNB reached an all-time high of $714, giving it a market capitalization of $110 billion.

Tokens like BNB do not offer 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 employee, as a “form of action because there are no public actions.”

The Securities and Exchange Commission (SEC) appears to agree, as it is currently suing Binance for selling BNB to US customers as an unregistered security.

The second component of CZ's wealth is more obscure. The results of an investigation published by Forbes and conducted with Gray Wolf in October 2023 revealed that Changpeng Zha was initially undersubscribed, which led CZ and his company to funnel unsold shares into portfolios he controlled.

In 2017, Binance said it sold 100 million BNB for $0.15 each, raising a total of $15 million. Our analysis showed that no more than 10.8 million BNB were sold, raising less than $5 million.

The value of the Binance founder's holdings would be $56.6 billion today, but since there is little chance of Zhao getting that value if he tried to sell, Forbes applied a 50% liquidity discount to his holding. Currently, BNB trading volume is around $1.6 billion worth of tokens per day.

Despite claiming to have 200 million customers globally, very little is known about the inner workings of Binance — it has never been audited — and over 53% of all BNB trades take place on Binance's own exchange.

Over the past month, BNB has gained around 5%, which equates to around $3 billion in gains for the Binance founder on paper. So as Zhao serves his four-month sentence, soaking up the California sunshine in the courtyard of the Lompoc II federal correctional facility, he watches his billions in BNB grow.

If you want my opinion on Binance, they are definitely out to screw and rip people off. A couple of months after Don Kwon's Terra (Luna) collapsed and lost billions of dollars for investors, Terra 2 was launched in 2022, and Binance highly recommended it. What does that tell you? Click on snapshot above to see how Kwon's new crypto option is doing!

Forbes don't tell you everything, so I researched Reuters who wrote about the results of his trial (criminal proceedings):

For me this business model encourages deceitfulness. In a way you could say he is supporting terrorism, sex trafficking, and everything dishonest normal people would avoid.

Four months prison sentence is a joke for someone that in my opinion is a gangster. The only difference is he tries to do it legitimately without sending his lynch mob.

Now though, Changpeng has even managed to get the government of the United States to give him accommodation and his meals at the taxpayer’s expense. This guy is on a role!

Take care!

Prof. Carl Boniface

Source: Forbes & Reuters (relevant additions have been added)

Vocabulary builder:

Trickster (n) = cheat, swindler, charlatan, fraud, con artist, slippery customer

Shyster (n) = a person, especially a lawyer, who uses unscrupulous, fraudulent, or deceptive methods in business. "An ambulance-chasing shyster."

Rip people off (idiom) an act or instance of stealing: theft. also: a financial exploitation.

Lynch mob (n) = a band of people intent on lynching someone. To lynch means (of a mob) kill (someone), especially by hanging, for an alleged offence with or without a legal trial. "Her father had been lynched for a crime he didn't commit."

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