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Binance founder says he’s ‘poor’ amid crypto meltdown, despite weighing 14 billion

Binance founder says he's 'poor' amid crypto meltdown, despite weighing 14 billion

The collapse of UST and LUNA took its toll on the crypto-economy. And along the way it destroyed several companies and many investors in the sector. But from there to being “poor again”… That’s a big step Changpeng Zhao crossed a bit quickly.

“Poor again “. That’s it tweeted on May 17 Changpeng Zhao, aka CZ, founder of crypto exchange Binance. The entrepreneur retweeted a Fortune article discussing the company’s massive investment in the cryptocurrency LUNA. The newspaper revealed that the platform had a total of 15 million LUNA, which represented $1.6 billion as of early May.

But since then, LUNA and its sister cryptocurrency, UST, have lost almost all of their value, with 15 million LUNA now worth… barely $2,200. The fall of the two cryptocurrencies surprised the entire sector: before the fall, LUNA was one of the most popular cryptocurrencies, and UST, a stablecoin, was tied to the price of the dollar. Both were considered relatively low-risk investments – and many investors and companies lost everything within days.

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Project Terra is dead // Source: Nino Barbey for Numerama

His fortune is estimated at 14 billion dollars.

However, until early May, everything was going well for the Terra blockchain and its ecosystem: its native cryptocurrency, LUNA, and its algorithmic stablecoin, UST. A few days before the crash, LUNA was still trading at $80 and UST was still pegged to the dollar, making them extremely popular projects. But indexation of UST to US currency was done thanks to the system apply and burn : there were no collateral assets, as with Tether.

The lack of collateral was the problem: a The UST panic selling phenomenon on May 9th caused the stablecoin to lose its connection and its value began to fall. In order to restore the level of the dollar, the Terra project teams decided to sacrifice LUNA, and created a lot of new units of the cryptocurrency, which caused its price to collapse. Today it is $0.0001343. This rapid decline affected all crypto investors and owners, who sometimes saw their savings completely wiped out.

Did Changpeng Zhao really become poor by accident? The Binance founder’s tweet should be taken with a grain of salt. First of all, the investment was not made in his name: the tokens were bought by the company. Following, the trading platform works very well : his investment in LUNA is only a small part of his assets. CZ is also far from poor: Bloomberg estimates his personal wealth at more than $14 billion. Changpeng Zhao and Binance are therefore doing quite well.

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Binance // Source: Numerama

But Binance was not the only platform to buy these cryptocurrencies: many companies and individuals did invested in the Terra ecosystem. Insider media estimates that the collapse of UST and LUNA led to the destruction of $50 billion, a huge financial abyss. For giants like Binance and CZ, the tally is not so impressive: an entrepreneur always has enormous wealth. But for small investors it is a disaster.

This is why CZ has spoken out to encourage the founders of the Terra project, in charge of UST and LUNA, to fully reimburse the smallest wallets – and Binance the last. ” Be an example and protect users “, he wrote on Twitter on May 16. ” Binance is asking the Terra project to first compensate individuals.”

So far, the Terra teams have not specified whether they will go for a full refund of the smallest investors. But they published a proposal to save the ecosystem and set up a blockchain ” Terra 2.0 “, which would give investors access to new units of cryptocurrency.

LUNA and UST owners do not know at this time whether they will receive a full refund. The guarantee of receiving new cryptocurrency tokens is not a guarantee of income: it is not certain that the project can be restarted after such a debacle. Some figures from the crypto world, because Justin Sun, the founder of stablecoin, promised to help the smallest investors with their personal wealth — but it will certainly not be enough to compensate for the loss of 50 billion.

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