Changpeng Zhao Jailed, But Binance Founder Still The Richest Man in Crypto
Changpeng Zhao will spend 4 months in jail. Photo by David Ryder/Getty Image.
Key Takeaways
- Binance founder Changpeng Zhao has been sentenced to four months in jail.
- But unlike some inmates, he won’t have to worry about money when he gets out.
- As a result of his majority ownership of Binance, Zhao’s estimated net worth is $43 billion.
Having been sentenced to four months in jail for his role in Binance’s anti-money laundering failures, Changpeng Zhao (CZ) is set to become the richest US inmate ever.
On top of his prison sentence, Zhao has also been ordered to pay a $200 million penalty for his crimes. But with an estimated net worth of $43 billion, it will barely make a dent in his fortune. However, news of his sentence coincided with a 5% correction in the price of BNB.
The Richest Man in Crypto
Zhao’s personal wealth stems from his majority ownership of Binance, the cryptocurrency exchange he founded in 2017.
While the platform’s market share declined significantly in 2023 following the Justice Department’s charges and CZ’s arrest, it has rebounded since then and currently accounts for nearly half of all centralized exchange trading volume.
The only crypto billionaire who has even come close to CZ’s riches is Sam Bankman-Fried. The disgraced FTX founder’s own net worth peaked at an estimated $26.5 billion.
While the crypto exchange that underpinned Bankman-Fried’s wealth turned out to be a house of cards, Binance has survived all kinds of adversity and still managed to maintain its dominant position.
Who Owns Binance?
Although Binance has never publicly disclosed details of its ownership, the exchange gave away precious little equity during early fundraising rounds. As a result, the firm’s founders retain majority ownership. Zhao alone reportedly owns an 85% to 90% stake in the business.
As part of the Justice Department settlement, Zhao cannot use his ownership of Binance to exert control over the company. But in his place, co-founder and mother to three of CZ’s children Yi He has been acting as the de facto majority shareholder.
A Binance blog post earlier this year reported that He owns at least a 10%stake in the exchange’s Cayman Islands-based parent company.
CZ’s Post-Binance Career
Since stepping down as Binance’s CEO, US legal troubles have distracted Zhao.
But even after he has served his sentence, he will never be able to return to a leadership role at the company.
When he initially stepped down, Zhao said he had no interest in founding another company. He also said he would take a more background role investing in Web3 startups. In March, he formed the free online children’s education platform Giggle Academy, which he described as “the most impactful thing I could do for the next chapter of my life”.
In the long term, CZ may consider selling some of his stake in Binance, potentially freeing up billions of dollars.
Under its new management, the crypto exchange remains an attractive prospect for private equity investors. Indeed, it could be even more attractive than before.
After all, Zhao’s departure didn’t just mark the end of an era that saw Binance emerge as the world’s preeminent crypto exchange. It also gave the company an opportunity to turn over a new leaf.
Regulators would likely welcome any deal to water down Zhao’s equity. This would help to separate the exchange from its indicted founder.
Once he comes out of jail, Changpeng Zhao has plenty of options.
