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Retail traders and investors are not the sole parties affected by America’s crackdown on cryptocurrency. Corporate leaders are also experiencing a decline in their wealth due to recent enforcement measures.
This week, the SEC initiated legal action against both Binance and Coinbase, extinguishing the optimism surrounding the crypto sector in 2023 following the market’s low point after the FTX collapse.
The action resulted in a loss of over $50 billion from crypto markets within hours on June 6, as reported by CryptoPotato, although the asset class rebounded relatively quickly. However, the same cannot be said for the wealth of certain individuals.
Crypto Billionaires Experience Significant Losses
As per Bloomberg’s Billionaire Index, Binance CEO Changpeng Zhao has witnessed a decrease in his wealth by $1.4 billion over the last two days. His current net worth is approximately $26 billion, according to the Index.
Binance experienced a surge in withdrawals, but this was confined to around 10,000 BTC, which represents only 1.5% of its total reserves, according to Glassnode. The situation for Binance.US may be more severe, however, following an SEC filing aimed at freezing its assets.
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Additionally, Coinbase CEO Brian Armstrong’s net worth has fallen by $361 million to $2.2 billion, according to the Billionaires Index.
On June 6, the SEC filed a lawsuit against Coinbase for functioning as an unlicensed securities broker, asserting that several crypto assets it provided were securities.
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Bloomberg reported that after a significant decline in the fortunes of crypto founders in 2022, there was a recovery this year with a total increase of $15.4 billion in 2023.
CZ’s net worth had risen by 117% and Armstrong’s by 61% due to rising crypto prices and trading volume. Other crypto billionaires on Bloomberg’s wealth index collectively increased by 9%.
That was until this week when the SEC triggered a decline in both crypto and stock prices with its wave of litigation against the sector.
Safeguarding American Banks
The U.S. banking crisis has unsettled the industry, prompting regulators to act swiftly to avert another financial crisis akin to that of 2008 (which was instigated by U.S. banks).
This may be a factor driving their campaign against crypto. Decentralized digital assets pose a challenge to the banking sector, which primarily profits from lending and investing others’ funds.
SEC Chair Gary Gensler has stated that America does not require cryptocurrency because it has the U.S. dollar.
“We don’t need more digital currency […] we already have a digital currency, it’s called the U.S. dollar,” Gensler remarked in an interview with CNBC on June 6. “Historically, we have not observed that economies and the public require more than one method to transfer value,” he added, which largely clarifies his motivation to target crypto.
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