The recent lawsuits by the United States Securities Exchange Commission (SEC) against two leading cryptocurrency exchanges, Binance and Coinbase, have taken a heavy toll on the net worths of the respective CEOs. According to data from Bloomberg Billionaires Index and Forbes, Brian Armstrong’s net worth was slashed by $289 million and Changpeng Zhao’s by $1.33 billion within just 30 hours after the SEC filed lawsuits against the exchanges on June 5th and 6th, respectively.
Zhao, who is the richest man in the crypto industry and the 54th richest person overall, had his net worth fall 5.1% to $26 billion this week. While his net worth has rebounded by over 106% this year, he is still down over 73% from his highest net worth of $96.9 billion in January 2022.
Armstrong, on the other hand, is ranked as the 1,409th richest person by Forbes and took the bigger hit from the SEC’s latest action, with his net worth falling 11.8% to $2.2 billion. However, he has managed to reap the rewards of a market rebound this year, with a 61% increase in net worth over that time.
Despite the recent fall, both Zhao and Armstrong have seen net worth increases well above the 9% year-to-date returns for others on Bloomberg’s rich list.
The SEC sued both Binance and Coinbase alleging the exchanges broke various securities rules, most notably for purportedly offering cryptocurrencies that the regulator considers to be unregistered securities. Following the lawsuits, the SEC has now classified a total of 67 cryptocurrencies as securities.
Binance and Coinbase have both confirmed they will “vigorously” defend the lawsuits laid against them.
The lawsuits serve as a reminder of the potential risks associated with investing in cryptocurrencies and highlight the regulatory challenges that the industry faces. However, they also underscore the growing importance of cryptocurrencies and blockchain technology in the financial world.
Many experts view these lawsuits as a positive development for the crypto industry, as they indicate that regulators are taking the industry seriously and are willing to hold companies accountable for their actions.
Furthermore, the lawsuits could pave the way for greater regulatory clarity and help legitimize the industry in the eyes of institutional investors and mainstream consumers.
While the SEC’s actions have had a significant impact on the net worths of Zhao and Armstrong, it remains to be seen how the lawsuits will ultimately affect Binance and Coinbase as companies, as well as the broader crypto market.
In the meantime, investors should be cautious and perform their own research before investing in cryptocurrencies, as the industry remains highly speculative and volatile. They should also keep an eye on regulatory developments, as these could have a significant impact on the future of the industry.