This week was a brutal one for one crypto billionaires.
This week, the Securities and Exchange Commission filed a pair of lawsuits that shook up the digital assets world. The agency sued major crypto exchange Coinbase in New York federal court, alleging that the company had acted as an unregistered broker and exchange. It demanded that the company “permanently restrained and enjoined” from proceeding with its activities.
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The agency also sued Binance, the world’s largest crypto exchange, as well as its founder, Changpeng Zhao, alleging that both had co-mingled billions of dollars worth of users’ assets and sent them to a European company under Zhao’s control.
Consequently, Coinbase CEO Brian Armstrong’s wealth saw a major collapse, falling $361 million to $2.2 billion, Bloomberg reported citing its Billionaires Index. Zhao—who is commonly referred to as CZ—has also seen his wealth fall by $1.4 billion to $26 billion over the past two days.
The losses are a stunning reversal in fortunes for the two entrepreneurs. Bloomberg reported that Zhao’s fortune had increased by 117 percent this year, and Armstrong’s had also seen a 61 percent jump through this past Friday. By comparison, other billionaires on Bloomberg’s wealth index had surged a combined 9 percent.
The SEC’s back-to-back lawsuits have also had impacts on the wider crypto community, with shares of several crypto-linked businesses and tokens falling. It has dashed hopes that the digital asset industry could come back stronger following the so-called “crypto winter” of 2022.
Reuters reported that Coinbase’s Armstrong responded to the SEC’s actions at a Bloomberg conference, saying that the company had contacted the regulator about becoming registered, but received an “icy reception” from Chair Gary Gensler during their first meeting. He also told CNBC that the two cases “could not be more different,” explaining that, for instance, he hadn’t been personally named in the lawsuit.
Meanwhile, Binance released a statement that said, in part: “We want to be clear that while we take the allegations in the SEC’s complaint seriously, they should not be the subject of an SEC enforcement action, let alone on an expedited basis. They are unjustified.”
