Despite the shackles of imprisonment, the fortune of Changpeng Zhao (commonly known as CZ), the illustrious founder of Binance, continues to swell prodigiously. Forbes' latest estimations peg his wealth at a staggering $61 billion, securing him a place among the world's financial elite. CZ’s incarceration for money laundering has seemingly had little impact on his burgeoning wealth. Defying the odds, he stands as the wealthiest individual behind bars and the richest persona in the cryptocurrency domain. Ranked 24th on Forbes' esteemed list, CZ trails just behind Julia Koch and her family. The next wealthiest in the crypto arena, Coinbase's Brian Armstrong, holds a relatively modest fortune of $11 billion.

The Pillars of CZ’s Wealth: Binance Stakes and BNB Tokens

CZ’s financial ascent can be attributed to two critical components. First, his commanding 90% stake in Binance, which retains a monumental value of $33 billion even after his resignation as CEO in November 2023. This departure followed a legal entanglement with the US Department of Justice, where Zhao admitted guilt to money laundering and sanctions breaches, resulting in Binance paying a hefty $4.3 billion fine, and a personal $50 million fine for Zhao. Remarkably, Binance's market share in the realm of crypto exchanges expanded to 42% within half a year of his resignation.

The second cornerstone of CZ’s wealth lies in his substantial holdings in BNB tokens, introduced by Binance. According to Forbes, CZ owns an awe-inspiring 94 million BNB tokens—approximately 64% of the 147.5 million BNB tokens circulating in the market. The value of BNB soared by 100% in 2024, eclipsing the gains of other major cryptocurrencies such as Bitcoin (54%), Ether (53%), and Solana (49%). With a record valuation of $714 per token, BNB's market capitalization surged to $110 billion.

A Brief History of BNB

Binance Coin (BNB) emerged in 2017 as a means to finance the birth of Binance. Unlike traditional corporate shares, BNB tokens function more like loyalty points, providing investors with transaction fee discounts and rewards for new account referrals. Notably, the SEC has taken legal action against Binance, asserting that the sale of BNB to US customers constitutes the distribution of unregistered securities.

Accumulating Wealth: CZ’s BNB Journey

CZ’s acquisition of BNB was facilitated through two primary channels. Initially, Binance's founding team received an allocation of 80 million BNB out of the original 200 million supply. Forensic analysis indicates that Binance retains 46.2 million of these tokens, attributing approximately 41.6 million to CZ, reflective of his 90% ownership stake. Furthermore, a Forbes investigation uncovered that Binance's Initial Coin Offering (ICO) was underwhelming, leading to the transfer of unsold tokens into wallets under CZ's control. Out of the intended 100 million BNB, only 10.8 million were sold during the ICO.

The fate of the unsold tokens was initially unspecified in Binance’s documentation. Later discoveries revealed these tokens in Binance-managed wallets, now estimated to contain 58 million BNB, valued at an astonishing $35 billion. CZ's 90% stake in Binance translates to roughly 52 million additional BNB, bringing his total holdings to nearly 94 million tokens.

Valuation and Market Insights

While CZ's holdings are valued at $56.6 billion, Forbes applied a 50% liquidity discount due to market constraints. Binance claims a global user base of 200 million, although it lacks comprehensive internal audits. Notably, 53% of BNB trading occurs on Binance itself. A recent 5% rise in BNB’s value has added $3 billion to CZ’s theoretical wealth, illustrating growth even as he endures a four-month sentence in California.

Concluding Thoughts

The saga of Changpeng Zhao is a riveting testament to resilience and financial acumen. Despite legal challenges and imprisonment, his fortune continues to rise, driven by strategic stakes in Binance and the success of BNB tokens. CZ's journey serves as a compelling narrative within the ever-evolving landscape of cryptocurrency.

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