Combination showing Former FTX CEO, Sam Bankman-Fried (L) and Zhao Changpeng (R), founder and chief executive officer of Binance.
After a brutal 18 months of bankruptcies, company failures and criminal trials, the crypto market is starting to claw back some of its former standing. Bitcoin is up more than 150% this year. Meanwhile, Solana is nearly 10x higher in the last 12 months, and bitcoin miner Marathon Digital has also skyrocketed. Crypto-pegged stocks like Coinbase, MicroStrategy, and the Grayscale Bitcoin Trust rose more than 300% in value year-to-date. But even as prices swell, the sector’s reputation has struggled to regain ground after names virtually synonymous with bitcoin have both been found guilty of crimes directly related to their multibillion-dollar crypto empires.
For years, Binance’s Changpeng Zhao and FTX’s Sam Bankman-Fried preached the power of decentralized, digital currencies to the masses. Yet they both, in the end, helped crypto critics and regulators make the case that the industry was rife with grifters and fraudsters intent on using new tech to carry out age-old crimes.
Even when the crypto market was at its hottest, as token prices hit all-time highs in Oct. 2021, some of the biggest names in business and politics shared their doubts. JPMorgan Chase CEO Jamie Dimon said in 2021 at peak crypto valuations that bitcoin was “worthless,” and he doubled down on that sentiment earlier this year when he said that the digital currency was a ”hyped-up fraud.” Microsoft co-founder Bill Gates said in 2018 that he would short bitcoin if he could, adding that cryptocurrencies are “kind of a pure ‘greater fool theory’ type of investment.”
Yet they both, in the end, helped crypto critics and regulators make the case that the industry was rife with grifters and fraudsters intent on using new tech to carry out age-old crimes.
Rather than ushering in a new era of financial freedom, Zhao and Bankman-Fried were found guilty on a mix of charges including fraud and money laundering. Once the two biggest names in crypto, the sector’s greatest proponents now face jail time. Bankman-Fried, 31, could be sentenced to life in prison after being convicted of seven criminal counts in early November, including charges related to stealing billions of dollars from FTX’s customers. Less than three weeks after Bankman-Fried’s conviction, Zhao pleaded guilty to criminal charges and stepped down as Binance’s CEO as part of a $4.3 billion settlement with the Department of Justice. Their crimes varied, but ultimately, both crypto execs went from industry titans to convicted frauds in the span of 12 months, and it was, in part, the bitter feud between them that landed them there.
The early days
Zhao and Bankman-Fried were friends at first, before they became one another’s chief rival. CZ, as Zhao is also known, had been first to the space. After a stint as the chief technology officer of a centralized crypto exchange called OKCoin, he launched a spot exchange of his own in 2017 called Binance, which has since become the largest cryptocurrency trading platform in the world, by volume.
The pair, according to Lewis’s reporting, were nothing alike in business or in personal dealings. The relationship between Zhao and Bankman-Fried began to sour a few months after they met. While the price of bitcoin today is relatively standard across the world’s exchanges, six years ago, the price differential would sometimes vary by more than 50%. This kind of arbitrage-based strategy, though relatively straightforward, wasn’t the easiest thing to execute on crypto rails back then, since it involved setting up connections to each one of the trading platforms. FTX’s success begat a $2 billion venture fund that seeded other crypto firms. Bankman-Fried’s personal wealth grew to around $26 billion at its peak, and FTX reached a valuation of $32 billion before it all came crashing down. As the two grew to be formidable opponents, FTX opted to buy out Binance in 2021 with a combination of FTT and other coins, according to Zhao.
Battle of the titans rocks crypto
As crypto prices tanked in 2022 and a cascade of bankruptcies rocked confidence in the sector, Bankman-Fried boasted that he and his enterprise were immune. Zhao dropped the hammer with a tweet saying that because of “recent revelations that have came [sic] to light, we have decided to liquidate any remaining FTT on our books.” The threat led to a panic-led sell-off of the FTT token. In fact, during the criminal trial of Bankman-Fried, both the prosecution and defense agreed that $10 billion in customer money that was sitting in FTX’s crypto exchange went missing, with some of it going towards payments for real estate, recalled loans, venture investments, and political donations. They also agreed that Bankman-Fried was the one calling the shots.
Winning the war
Legal experts tell CNBC that one critical distinction in the case of Zhao versus Bankman-Fried is the success of their respective enterprises. “Binance has a war chest that it could use to pay hefty fines and provide leverage that gave the DOJ and CFTC a reason to settle.” FTX, on the other hand, remains in bankruptcy court in Delaware as it looks to claw back cash in an attempt to make the exchange’s former investors and customers whole.
The world of cryptocurrency is a volatile one, with fortunes made and lost in a matter of days. In such a high-stakes environment, the actions and decisions of the industry’s most prominent figures can have a significant impact on the market as a whole. In this article, we will explore the rise and fall of two of the biggest crypto billionaire CEOs, and how they went from heroes to zeroes in just 12 months.
Bitcoin, Ethereum, and other cryptocurrencies have seen unprecedented growth in recent years, attracting the attention of investors, entrepreneurs, and the general public. Two CEOs, once hailed as heroes for their contributions to the industry, now find themselves at the center of controversy and criticism. Let’s take a closer look at how these once celebrated figures suffered a rapid fall from grace and ended up proving their critics right.
The Rise of the Crypto Billionaire CEOs:
In the early days of cryptocurrency, the names of these two CEOs were synonymous with innovation, vision, and success. Their companies were at the forefront of the digital currency revolution, and their leadership was crucial in advancing the adoption and acceptance of cryptocurrencies on a global scale. Investors flocked to their companies, and their net worth skyrocketed, earning them the title of “billionaire CEOs.”
As the value of Bitcoin and other cryptocurrencies surged, so did the influence and reputation of these CEOs. They were seen as trailblazers in the industry, leading their companies to unprecedented heights and effectively shaping the future of finance. Their success stories were celebrated in the media, and they were often hailed as the saviors of the financial world.
However, the tides began to turn for these once revered CEOs. As the cryptocurrency market experienced significant fluctuations, their companies faced mounting challenges and controversies. The lack of regulation and oversight in the industry led to allegations of fraud and market manipulation, tarnishing the reputations of these CEOs and their companies.
The value of Bitcoin and other cryptocurrencies began to plummet, and investors started to question the long-term viability of the industry. Amidst this uncertainty, the actions and decisions of these CEOs came under intense scrutiny. It became clear that their promises of a disruptive and transformative financial landscape were falling short, and their optimistic projections for the future were proving to be misguided.
The downfall of these two crypto billionaire CEOs had a profound impact on the industry as a whole. Their companies, once seen as pioneers in the field, struggled to regain investor confidence and faced legal and regulatory challenges. The once booming cryptocurrency market now faced uncertainty and skepticism, with many questioning the future of digital currency.
Critics of the industry, who had long warned of the risks and pitfalls of investing in cryptocurrencies, found validation in the actions of these fallen leaders. The public perception of the industry shifted, and the once-rosy outlook for the future of digital currency turned bleak. The heroes had indeed become zeroes, and the implications were felt far and wide.
The rise and fall of these two crypto billionaire CEOs offer valuable lessons for investors, entrepreneurs, and industry leaders. Their experiences serve as a cautionary tale of the inherent risks and challenges in the cryptocurrency market, and the importance of transparency, accountability, and ethical conduct in business.
For investors, the downfall of these once-prominent figures is a sobering reminder of the volatile nature of the industry and the need for thorough due diligence before making investment decisions. Entrepreneurs and industry leaders can learn from the missteps of these CEOs and strive to build their companies on a foundation of integrity and responsible leadership.
As the cryptocurrency market continues to evolve, it is essential to learn from the mistakes of the past and work towards a more sustainable and ethical future. Regulatory efforts to bring transparency and oversight to the industry are gaining momentum, and responsible leaders are emerging to rebuild trust and credibility in the market.
Ultimately, the rise and fall of the two biggest crypto billionaire CEOs serve as a cautionary tale of the pitfalls of unchecked ambition and the importance of ethical business practices. Their journey from heroes to zeroes in just 12 months is a stark reminder that in the world of cryptocurrency, success can be fleeting, and the path to sustainable growth requires steadfast commitment to integrity and responsibility.
The rapid rise and fall of the two biggest crypto billionaire CEOs serve as a cautionary tale for the entire cryptocurrency industry. Their missteps and downfall prove that unchecked ambition and ethical lapses can lead to catastrophic consequences. As the industry continues to evolve, it is crucial for investors, entrepreneurs, and industry leaders to learn from these lessons and work towards a more sustainable and responsible future for cryptocurrency. The heroes may have become zeroes, but their story serves as a valuable reminder of the risks and challenges that come with being at the forefront of one of the most volatile industries in the world.