Technology

This is how crypto millionaires lost immense fortunes in a few days

Coinbase founder Brian Armstrong

Coinbase founder Brian Armstrong

It has been several weeks since the crypto crowd was partying in Miami.

Coinbase founder Brian Armstrong had a personal fortune of $13.7 billion in November and around $8 billion at the end of March. That’s now just $2.3 billion, according to the US Billionaires Index. Bloomberg, after a sell-off of digital currencies from Bitcoin to Ether triggered a sharp drop in the market value of Coinbase, the largest US cryptocurrency exchange.

nft-coinbase

nft-coinbase

Shares of the company have fallen 78% from its April 2021 initial public offering through Wednesday, and are down another 23% at $56.50 as of 12:18 p.m. than in the first.

It has raised questions about Coinbase’s ability to withstand the sharp decline in crypto prices, forcing Armstrong to take to Twitter to defend the company. There is no “bankruptcy risk” even in the midst of a “black swan” event and user funds are safe, said Armstrong, the company’s chief executive.

brian_armstrong-

brian_armstrong-

Then this Michael Novogratz. The CEO of crypto merchant bank Galaxy Digital has seen his fortune plummet to $2.9 billion, from $8.5 billion in early November. He has been a champion of TerraUSD, the algorithmic stablecoin now at risk of collapsing entirely amid a collapse in the price of a crypto token in the same ecosystem, Luna.

“I’m probably the only guy in the world who has a Bitcoin tattoo and a Moon tattoo,” Novogratz said at the Bitcoin 2022 conference in Miami on April 6.

Michael Novogratz

Michael Novogratz

Multi-billion dollar crypto fortunes that grew in the last two years are disappearing after a sell-off that started with tech stocks and turned into digital money. Bitcoin, the most popular cryptocurrency, and Ether are down more than 50% from their all-time highs late last year.

While almost all cryptocurrency holders have suffered declines in wealth, some of the largest and most visible losses are concentrated among the founders of exchanges, where traders buy and sell digital currencies.

Changpeng Zhao Binance

Changpeng Zhao of Binance

On paper at least, Changpeng Zhao, the CEO of closely held Binance, has lost an even bigger fortune than Armstrong or Novogratz. He debuted on the Bloomberg Wealth Index in January with a net worth of US$96 billion, one of the largest in the world.

By Wednesday, that had dropped to $16 billion, using the average enterprise value for sales multiples from Coinbase and Canadian crypto firm Voyager Digital as the basis for calculations.

Cryptocurrency exchanges in the US appear to be suffering from a bigger downturn than their global competitors. Trading volumes on Coinbase have been steadily declining since the beginning of the year, while Binance, which has a more international focus, saw a spike in volume last month.

Binance

Binance

Binance’s US-focused business, by comparison, saw even steeper declines than Coinbase’s.

Tyler and Cameron Winklevoss, co-founders of rival crypto exchange Gemini, have each lost around $2.1 billion, or about 40%, of their wealth this year. The fortune of Sam Bankman-Fried, CEO of crypto exchange FTX, has halved since the end of March to about $13 billion.

Tyler and Cameron Winklevoss are founders of Gemini

Tyler and Cameron Winklevoss are founders of Gemini

Armstrong is not the only Coinbase billionaire losing money. Co-founder Fred Ehrsam, A former Goldman Sachs Group Inc. trader, he is currently worth $1.3 billion, down more than 60% this year.

Armstrong owns 16% of Coinbase and controls 59.5% of its voting shares, according to the company’s 2022 proxy statement, while Ehrsam has a 4.5% stake and controls 26% of Coinbase. their voting shares.

Coinbase bonds have also tumbled, recently trading in line with some of the riskier junk-rated notes.

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