Cryptocurrency billionaires’ fortunes wiped out

Crypto billionaires, including the heads of some of the biggest trading platforms, saw their fortunes wiped out by the stock market crash, with one losing over $120 billion.

Cryptocurrency billionaires, including the founders and CEOs of the biggest trading platforms, saw their personal fortunes wiped out by the latest stock market crash.

Coinbase has lost half of its value over the past week, with the majority of sales occurring before the company even reported a net loss of $430 million in the first quarter amid falling users and Sales.

A strong cryptocurrency selloff from bitcoin to ethereum is behind the decline, with shares of the largest exchange in the United States having now fallen 84% since their April 2021 trading debut to close at 53, US$72 Wednesday.

As of Thursday morning, many major cryptocurrencies were at their lowest levels since late 2020.

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This saw the net worth of Coinbase founder Brian Armstrong plummet.

Mr. Armstrong had a personal fortune of $13.7 billion in November, according to the Bloomberg Billionaires Index, but that is down to just $2.2 billion, a loss of $11.5 billion.

Taking to Twitter, Mr Armstrong sought to reassure investors and customers that “we have no risk of bankruptcy…even in a black swan event like this”. “Your funds are safe at Coinbase, as they always have been,” he said.

Bloomberg reports that the hardest hit was Binance CEO Changpeng Zhao, who debuted in the index in January with a net worth of $96 billion. On Wednesday, that was estimated at just $11.6 billion, a staggering drop from $84.4 billion.

Tyler and Cameron Winklevoss, co-founders of crypto exchange Gemini, each lost around $2.2 billion, or 40% of their wealth this year, while crypto exchange CEO Sam Bankman-Fried FTX, has seen its fortunes halve since late March to $11.3 billion, according to the report.

Michael Novogratz, CEO of crypto merchant bank Galaxy Digital, has seen his fortune plummet from $8.5 billion to $2.5 billion since November. Mr. Novogratz promoted terra, the struggling “stablecoin” currently on the verge of complete collapse.

In January, he proudly displayed a new tattoo of luna, a crypto token in the terra ecosystem.

“I’m probably the only guy in the world who has both a bitcoin tattoo and a luna tattoo,” he said at a bitcoin conference in Miami last month.

Collapse of stablecoins

Terra, which is believed to be pegged to the US dollar, lost about half of its value this week, sending panic to the already feverish crypto-asset world.

At one point, terra was trading as low as 30 cents on Wednesday before recovering to around 50 cents, according to website CoinGecko.

So-called stablecoins like terra are supposed to be less volatile than cryptocurrencies like bitcoin or ethereum.

Their peg to traditional currencies aims to provide investors with more certainty and security.

But terra and several other stablecoins are not backed by any revenue streams, instead relying on algorithms to quickly move funds between cryptocurrencies as they rise and fall in value.

Luna Foundation Guard, which backs terra, said on Monday it deployed the equivalent of $1.5 billion in cryptocurrencies to stabilize the coin.

The founder of the coin Do Kwon said on Twitter on Tuesday that it was preparing to present a recovery plan.

“I understand that the last 72 hours have been extremely difficult for all of you – know that I am committed to working with each of you to overcome this crisis, and we will get through this. Together,” he wrote on Wednesday, as he outlined a series of measures.

“Terra’s focus has always been on a long-term time horizon, and another setback in May, similar to last year, won’t deter #LUNAtics. Short-term stumbles don’t define what you can accomplish. It’s how you react that matters.

But terra continued to slump, perhaps caught up in a broader cryptocurrency selloff that saw bitcoin plunge this week to its lowest value since last July.

US Treasury Secretary Janet Yellen told a Senate committee on Tuesday that the terra episode illustrates “there are risks to financial stability and we need an appropriate framework.”

Anto Paroian of hedge fund ARK36, which specializes in crypto assets, said long-term regulation would be a “net positive for the crypto space.”

“But if stablecoin issuers are regulated as tightly as banks, it could stifle one of the most innovative, successful and important sectors of the crypto market,” he added.

— with AFP

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