00:00Today on Forbes, How Crypto's Richest Billionaire Doubled His Net Worth Behind Bars
00:08Prison has been good to Binance founder Changpeng Zhao, who is also known as CZ.
00:14Already the richest person to go behind bars and the wealthiest person in crypto many times
00:18over, Zhao's net worth has soared since he became a felon.
00:24Forbes now estimates that he is worth $61 billion, making him the 24th richest person
00:29in the world, just after Julia Koch and Family.
00:33The next richest person in crypto is Coinbase founder Brian Armstrong, at $11 billion.
00:39CZ's upward revision has two components.
00:43First, his 90% equity stake in Binance, the large crypto exchange, is valued at $33 billion
00:50despite CZ stepping down as CEO in November 2023.
00:54He stepped down as part of a settlement with the U.S. Department of Justice, in which he
00:58pled guilty to anti-money laundering and sanctions violations.
01:02His company also paid a $4.3 billion fine to the government.
01:06However, the impact on Zhao's personal wealth was less severe, since he only had to pay
01:12a $50 million fine.
01:15In the six months since his plea, Binance actually increased its dominance among crypto
01:19exchanges worldwide in terms of trading volume, though it was excluded from Forbes' list
01:24of the most trustworthy crypto exchanges.
01:27According to data compiled from The Block, which is a digital assets information company,
01:32Binance's share of the total spot market across exchanges has increased to 42% in the
01:38six months since he left the company, from an average of 38% in the two months before
01:43his settlement.
01:45The big change to CZ's net worth comes from Forbes' discovery of his personal holdings
01:49in his exchange-issued token BNB, which we estimate to be 94 million tokens, or 64% of
01:57the total 147.5 million BNB tokens in circulation.
02:02Forbes estimates that Binance owns 71% of the BNB supply.
02:08Despite the exchange's legal woes, BNB has been on a tear in 2024, surging 100%, far
02:15outpacing other top cryptos such as Bitcoin, which is up 54%, Ether, up 53%, and Solana,
02:23up 49%.
02:25BNB recently hit an all-time high of $714, giving it a market capitalization of $110
02:32billion.
02:33So you might ask, what is BNB?
02:37BNB, or Binance Coin, initially launched in 2017 as a fundraising tool for CZ to launch
02:44his new exchange.
02:46Tokens like BNB are created by the developers running the crypto projects, and more similar
02:51to airline mileage loyalty points than actual equity shares in a company, though they trade
02:56on crypto exchanges like stocks and are sought after by investors.
03:00Tokens like BNB offer no ownership but reward holders, who are often customers, with discounts
03:06for trading or as an incentive to recruit new account holders.
03:10They are often used, in the words of one former FTX insider, whose company's exchange token
03:15FTT led to its dramatic downfall as a, quote,
03:19form of stock because there is no public equity.
03:23The Securities and Exchange Commission seems to agree, as it is currently suing Binance
03:28for selling BNB to U.S. customers as an unregistered security.
03:32Zhao, who is 47 years old, amassed his BNB stockpile in two ways.
03:39Binance was created in 2017, and he and the founding team received 80 million tokens from
03:44a total supply of 200 million BNB.
03:47Forbes' forensic analysis of the wallets that receive these tokens, conducted in conjunction
03:52with Graywolf Analytics, indicates that the company holds 46.2 million of the original
03:5780 million tokens.
04:00CZ is credited with 41.6 million BNB from this amount due to his 90% ownership of Binance.
04:07The second component of CZ's wealth is more obscure.
04:10The results from an investigation published by Forbes and conducted with Graywolf in October
04:152023 revealed that Binance's ICO, or Initial Coin Offering, was initially undersubscribed,
04:23which led to CZ and his company funneling unsold shares into wallets he controlled.
04:27In 2017, Binance claimed that it sold 100 million BNB for 15 cents each, raising a total
04:35of $15 million.
04:37More analysis last fall showed that no more than 10.8 million BNB was sold, netting less
04:43than $5 million.
04:46For full coverage, check out Javier Paz and Stephen Ehrlich's piece on Forbes.com.
04:52This is Kieran Meadows from Forbes.
04:54Thanks for tuning in.
