How Crypto’s Richest Billionaire Doubled His Net Worth Behind Bars

Binance’s founder, known to crypto followers as CZ, is spending the summer in Santa Barbara’s Lompoc minimum security prison. As crypto markets climb, Forbes reveals the secret source of his ballooning billions.

_{By Javier Paz, Forbes Staff and Steven Ehrlich, Forbes Staff}

Prison has been good to Binance founder Changpeng Zhao. Already the richest person to go behind bars and the wealthiest person in crypto many times over, Zhao’s net worth has soared since he became a felon.

Forbes now estimates that he is worth $61 billion, making him the 24th richest person in the world, just after Julia Koch and family. The next richest person in crypto is Coinbase founder Brian Armstrong at $11 billion.

CZ’s upward revision has two components. First, his 90% equity stake in Binance, the large crypto exchange, is valued at $33 billion despite CZ stepping down as CEO in November 2023 as part of a settlement with the U.S. Department of Justice in which he pled guilty to anti-money laundering and sanctions violations. His company also paid a $4.3 billion fine to the government. However, the impact on Zhao’s personal wealth was less severe, since he only had to pay a $50 million fine. In the six months since his plea, Binance actually increased its dominance among crypto exchanges worldwide in terms of trading volume (though it was excluded from Forbes’ list of the most trustworthy crypto exchanges.) According to data compiled from The Block, its share of the total spot market across exchanges has increased to 42% in the six months since he left the company from an average of 38% in the two months before his settlement.

BNB VERSUS BITCOIN AND ETHEREUM

Year-to-date 2024 performance

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

Despite the exchange’s legal woes, BNB has been on a tear in 2024, surging 100% far outpacing other top cryptos such as bitcoin (up 54%), ether (up 53%), and solana (up 49%). BNB recently hit an all-time high of $714, giving it a market capitalization of $110 billion.

What is BNB? Binance coin or BNB initially launched in 2017 as a fundraising tool for CZ to launch his new exchange. Tokens like BNB, are created by the developers running the crypto projects and similar to airline mileage loyalty points than actual equity shares in a company, though they trade on crypto exchanges like stocks and are sought after by investors. Tokens like BNB offer no 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 one former FTX insider, whose company’s exchange token FTT led to its dramatic downfall, as a “form of stock because there is no public equity.” The Securities and Exchange Commission seems to agree, as it is currently suing Binance for selling BNB to U.S. customers as an unregistered security.

Changpeng Zhao, 47, amassed his BNB stockpile in two ways. Binance was created in 2017, and he and the founding team received 80 million tokens from a total supply of 200 million BNB. Forbes’s forensic analysis of the wallets that received these tokens, conducted in conjunction with Gray Wolf Analytics, indicates that the company holds 46.2 million of the original 80 million tokens. CZ is credited with 41.6 million BNB from this amount due to his 90% ownership of Binance.

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 Binance’s ICO was initially undersubscribed, which led to CZ and his company funneling unsold shares into wallets he controlled. In 2017, Binance claimed that it sold 100 million BNB for $0.15 each raising a total of $15 million. Our analysis last fall showed that no more than 10.8 million BNB was sold, netting less than $5 million.

BINANCE’S BNB OWNERSHIP

Current BNB supply: 147.5 million

In its official white paper, which functions in the world of crypto as a pseudo prospectus for ICO investors, Binance didn’t disclose what would happen to any unsold tokens. Ultimately, forensics show that they were placed into wallets that are owned by Binance. Today, we estimate that these wallets hold 58 million BNB, worth $35 billion at today’s price of $602. CZ’s 90% ownership of Binance would give him just over 52 million additional BNB. In total, we believe he owns nearly 94 million BNB tokens. Binance and CZ’s lawyers did not return our requests for comment on CZ’s holdings.

The value of Binance’s founder’s holdings would be $56.6 billion today, but given that there is little chance Zhao could get near that amount if he tried to sell, Forbes applied a 50% liquidity discount to his stake. Currently BNB’s trading volume is about $1.6 billion worth of tokens per day.

Despite claiming to have 200 million customers globally, very little is known about Binance’s inner workings—it has never undergone an audit—and more than 53% of all BNB trading occurs on Binance’s own exchange. In the last month, BNB has gained about 5%, which amounts to about $3 billion in gains for Binance’s founder on paper. So as Zhao serves out his four month sentence, soaking up the California sun in the yard of Lompoc II federal correctional facility, he watches his BNB billions grow.

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