Crypto Millionaires Lose Their Fortunes Amid Turbulence

(Bloomberg) — As of November, Coinbase Global Inc. founder Brian Armstrong had a personal fortune of $13.7 billion. But the figure dropped to just $2.3 billion, according to the Bloomberg Billionaires Index, after a sell-off in digital currencies, which has ranged from bitcoin to ether, caused Coinbase’s market value to plunge sharply. , the largest cryptocurrency exchange in the United States.

Shares of the company have plunged 78% since its initial public offering in April 2021 through Wednesday, and were down another 24% at $54.91 as of 3:00 p.m. ET, after the company It warned that trading volume and users transacting monthly are expected to be lower in the second quarter than in the first.

This has raised questions about Coinbase’s ability to withstand the sharp drop in crypto prices, forcing Armstrong to come out in defense of the company on Twitter. There is no «risk of bankruptcy» even in a «black swan» event and user funds are safe, said Armstrong, the company’s chief executive.

The multibillion-dollar cryptocurrency fortunes that have surged in the last two years are disappearing after a sell-off that began with tech stocks spread to digital money. Bitcoin, the most popular cryptocurrency, and ether are down more than 50% from their all-time highs late last year. TerraUSD, an algorithmic stablecoin, is at risk of crashing outright.

It is a far cry from what it was just a few weeks ago, when the cryptocurrency community was partying in Miami.

While nearly all cryptocurrency holders have seen their fortunes plummet, some of the biggest and most visible losses are concentrated among the founders of exchanges, where traders buy and sell digital currencies.

Continue reading the story

At least on paper, Changpeng Zhao, the CEO of Binance, has lost an even bigger fortune than Armstrong. He debuted on the Bloomberg Wealth Index in January with a net worth of $96 billion, one of the largest in the world. On Wednesday it had been reduced to $16 billion, using the average enterprise value against the sales multiples of Coinbase and Canadian crypto firm Voyager Digital as the basis for the calculation.

Cryptocurrency exchanges in the US seem to be suffering a greater decline than their international competitors. Trading volumes on Coinbase have fallen steadily since the beginning of the year, while the more internationally focused Binance saw a spike in volume last month. By comparison, Binance’s US-focused business saw an even steeper decline than Coinbase’s.

Tyler and Cameron Winklevoss, co-founders of rival cryptocurrency exchange Gemini, have each lost around $2.1 billion, or roughly 40% of their assets, this year. Michael Novogratz, CEO of crypto merchant bank Galaxy Digital, saw his fortune plummet from $8.5 billion in early November to $2.9 billion.

Armstrong is not the only Coinbase billionaire losing money. Co-founder Fred Ehrsam, a former Goldman Sachs Group Inc. trader, currently has $1.3 billion in net worth, 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 securities.

original note:

Crypto Billionaires’ Vast Wealth Destroyed in Weeks Amid Turmoil

More stories like this are available on bloomberg.com

©2022 Bloomberg LP