Binance’s Changpeng Zhao went from zero to $65 billion in under five years, leaving Michael Dell, Charles Koch and 2,645 other world billionaires in the dust.
hangpeng Zhao, the founder and CEO of Binance, is the wealthiest person in crypto, worth an estimated $65 billion, according to Forbes’ 2022 Billionaires rankings, published on Tuesday April 5.
That makes “CZ,” as he is commonly known, at age 44, the 19th richest person in the world, ahead of well-known U.S. billionaires like computer mogul Michael Dell and energy tycoon Charles Koch.
After speaking with crypto industry analysts and individuals familiar with Binance’s business, Forbes estimates Binance’s market valuation to be $92.5 billion (based on March 11 market prices) and Zhao’s ownership stake to be at least 70%.
The privately-held Binance does not share information on its financials or ownership structure. Officially registered in the Cayman Islands, Binance operates in over 180 countries through a network of affiliated subsidiaries, an approach that has led to regulatory challenges. Authorities in Japan, the U.K. and Hong Kong have all issued warnings in the past year against the company for operating without regulators’ permission. In May 2021, Bloomberg published a report alleging that Binance was facing an investigation by the U.S. Department of Justice and Internal Revenue Service over money laundering and tax evasion. Binance said it takes its legal and compliance obligations seriously, and declined to comment on specific inquiries.
Among the hundreds of crypto exchanges that exist globally [See Forbes’ Global Crypto Exchanges Ranking] Binance has a novel business model that involves issuing its own tokens, known as Binance coin (BNB), to customers and using them as an incentive for trading and recruiting other new customers. In this multi-level marketing structure, the more BNB coins you hold and the more people you attract to the trading platform, the greater commissions and discounts you earn. Initially BNB was used mostly for trading discounts, but its use has expanded to a full-fledged cryptocurrency with an array of payment uses on platforms including rival exchanges like Crypto.com.
Binance also practices what is known in the crypto world as “burning,” or retiring the tokens on a regular basis to control the amount outstanding. In January 2020, it was reported that Binance stopped burning its native token BNB at a rate proportional to profit, opting instead for a burn rate tied to trading volume, obscuring the public’s view into how much money Binance was making. According to CoinMarketCap, a crypto pricing website owned by Binance, BNB token currently has a market capitalization of $73 billion. CZ’s ownership of BNB coins is unknown, so it is not included in Forbes’ net worth calculation.
Coinbase’s successful IPO and market valuation of $42 billion (as of March 11, 2022, when Forbes took a global snapshot of billionaire wealth) provides a benchmark from which to value the bigger crypto exchange. Crypto analytics firm Nomics reports that Binance’s trading volume is more than 15 times greater than Coinbase’s.
CZ has previously danced around his ownership stake in Binance, telling Forbes in January 2021 that he owned around 30%—maybe: “I don’t really know what my net worth is. I’m not too bothered about it,” he said in the summer. But according to people familiar with the matter who spoke with Forbes on the condition of anonymity, CZ’s stake in Binance is considerably higher–at least 70%. (Binance subsidiaries registered in the U.K. and Malta suggest CZ owns majority stakes in those firms, although it is difficult to confirm the size of those entities within Binance’s larger Cayman Islands holding company.)
Like other crypto-rich, Zhao is a programmer whose fortune is self-made. He was born in Jiangsu, China in 1977. Shortly afterward, his father, a professor, was labeled a “pro-bourgeois intellect” and temporarily exiled. In the late 1980s, the family moved to Vancouver, Canada. As a teenager, CZ pitched in to cover household expenses, flipping burgers at McDonald’s and working overnight shifts at a gas station. At 16, he picked up coding and then completed a computer science degree in Montreal at McGill University. The young coder spent time in Tokyo, New York, and Shanghai, building high-frequency trading systems for Wall Street’s quantitative traders, also known as “flash boys.”
In 2013, CZ learned about bitcoin from a venture capitalist with whom he played poker. After bouncing around prominent crypto projects, he raised $15 million through a token crowd sale and launched Binance in July 2017. From its early days Binance was renowned by crypto-traders for its speed of execution and for the rate it issued new products. In 2019, for example, the exchange released Binance Launchpad, a tool that enabled the rapid issuance of new tokens on its platform and in 2020 launched its own crypto staking facilitator called Binance Launchpool.
Binance’s current estimated market value of $92.5 billion puts it in the upper echelon of private tech companies, alongside TikTok parent company ByteDance, payments giant Stripe and Elon Musk’s SpaceX. Recently Binance has been expanding to new verticals and regions. In February, the company announced that it plans to spend $200 million to buy a minority stake in Forbes via a SPAC transaction. “We want to identify and invest in one or two targets in every economic sector and try to bring them into crypto,” Zhao said earlier this month.
Among crypto exchanges, Binance has achieved an impressive level of market dominance. In 2021, Binance facilitated trades worth over $9.5 trillion, over two-thirds of all trading volume handled by centralized crypto exchanges, according to The Block, a news and crypto research publication. According to Forbes’ analysis of Binance’s trading volume and fees, the exchange generated an estimated $16.8 billion in trading fees last year.
To estimate the company’s valuation, Forbes–on the advice of several crypto industry analysts–multiplied Binance’s estimated revenue by the enterprise value-to-sales multiple of the publicly-traded Coinbase Global. We then applied our customary 10% discount for private companies, followed by another 10% to account for Binance’s uncertain regulatory situation. Our valuation estimate includes the billionaire’s bitcoin holdings acquired in 2014, worth approximately $50 million at current prices–far less than 1% of his $65 billion net worth.
A company spokesperson told Forbes over email: “It is difficult for us to confirm the worth of Binance due to the market volatility. Also, it is hard for us to confirm CZ’s personal wealth.”
CZ, who says he plans to give away at least 90% of his wealth, claims to be much poorer: “I only count what’s in my wallet, which is not much at all. The rest are all opinions,” he tweeted.
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