The crypto-craze has turned Zhang Bingchao, Sam Pinkman Fred, Mike Novogratz, as well as a handful of other digital asset pioneers into billionaires. But once they became the new faces of global wealth, they now see their fortunes fading away at a rapid pace.
Crypto billionaires’ fortunes soared to $145 billion on November 9, when bitcoin reached a record high of nearly $69,000, and since then 7 crypto-related net worth individuals have lost $114 billion, according to the Bloomberg Billionaires Index.
Many other people who have bet big on Bitcoin, from MicroStrategy CEO Michael Saylor to El Salvador President Najib Bukele, are upset after the price of the world’s largest cryptocurrency fell below $21,000, the lowest level since December 2020.
While cryptocurrencies were earlier seen as ushering in a new era of decentralized finance, the crypto market experienced two high-profile crashes in a matter of weeks. Especially after Celsius, one of the largest cryptocurrency lending platforms, announced on Sunday that it has frozen all transactions on its network following speculation that it will not be able to meet the promised returns on some of its products. This followed the collapse in May of the stablecoin TerraUSD and its token, Luna, on which Novogratz’s Galaxy Digital Holdings had relied heavily.
And while global markets are in turmoil as the Federal Reserve and other central banks plan aggressive rate hikes to battle the highest inflation in decades, the speed with which the crypto market has fallen in recent weeks stands out. Although there is little evidence of cracks in the broader US labor market thus far, losses in digital assets have led some crypto billionaires to cut jobs.
Crypto billionaires losses
Coinbase Global, the largest cryptocurrency exchange by trading, said Tuesday that it will lay off 18% of its workforce, citing the possibility of a recession that could lead to a “crypto winter.”
“Our personnel costs are too high to effectively manage this uncertain market,” Coinbase founder Brian Armstrong wrote in a blog post announcing the cuts. “The actions we are taking today will allow us to manage this period with greater confidence, even if it is extremely prolonged.”
Zhao, founder of Binance, one of the world’s largest cryptocurrency exchanges, said his company has a “very healthy war fund” and is expanding hiring.
War fund means any financial instruments or reserves owned by the company that enable it to face emergency crises.
However, the fortune of the 44-year-old, who was ranked 11th globally, has fallen by 89% to $10.2 billion since he first appeared on the Bloomberg Wealth Index in January. His company has also become a focal point for US investigators seeking to rein in the crypto industry.
The fortune of the 30-year-old CEO of cryptocurrency exchange FTX Bankman Fred has fallen 66% since his fortune peaked at $26 billion.
On Monday, Novogratz’s fortune, 57, fell to $2.1 billion, less than it was when he first appeared on the Bloomberg Billionaires Index in December 2020, when bitcoin was trading at around $29,000.
Meanwhile, Gemini co-founder twins Cameron and Tyler Winklevoss have seen their fortunes fall to $3 billion each, from $5.9 billion. The stock market had announced a 10% reduction in the number of its employees this month.
Coinbase founder Armstrong and co-founder Fred Ehrsam’s fortunes, which were a total of $18.1 billion, have also shrunk to $2.1 billion each, as the company’s shares have fallen 79% since its initial public offering.
