Binance Founder Says He's 'Poor' Amid Crypto Crash, Despite Weighing 14 Billion

Binance Founder Says He’s ‘Poor’ Amid Crypto Crash, Despite Weighing 14 Billion

The collapse of UST and LUNA has taken a toll on the crypto economy. And has, in passing, ruined a few companies and many investors in the sector. But from there to being “poor again”… There is a big step, that Changpeng Zhao crossed a little quickly.

“Poor again “. It’s that tweeted on May 17 Changpeng Zhao, aka CZ, the founder of crypto exchange Binance. The entrepreneur was retweeting a Fortune article in which he discussed the company’s massive investment in the LUNA cryptocurrency. The newspaper revealed that the platform has a total of 15 million LUNA, which represented until the beginning of May 1.6 billion dollars.

But since then, the LUNA and its sister cryptocurrency, the UST, have lost almost all value, and the 15 million LUNA are now worth… barely $2,200. The crash of the two cryptocurrencies took the entire sector by surprise: before its fall, the LUNA was one of the most popular cryptos, and the UST, a stablecoin, was pegged to the price of the dollar. Both were seen as relatively low-risk investments — and many investors and companies lost everything within days.

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The Terra project is dead // Source: Nino Barbey for Numerama

His fortune is estimated at $14 billion.

Until the beginning of May, however, everything was going well for the Terra blockchain and its ecosystem: its native crypto-currency, the LUNA, and its algorithmic stablecoin, the UST. A few days before the crash, the LUNA was still trading for $80 and the UST was still pegged to the dollar, making them extremely popular projects. But the indexation of the UST on the American currency was done thanks to a system of mint and burn : there were no collateral assets, as with Tether.

It was this lack of collateral that posed the problem: a UST’s panic selling phenomenon on May 9 caused the stablecoin to lose its peg, and its value began to plummet. In order to regain the level of the dollar, the teams of the Terra project decided to sacrifice the LUNA, and created very many new units of the cryptocurrency, which caused its price to collapse. Today it is $0.0001343. This flash crash affected all crypto investors and owners, who sometimes saw their savings completely destroyed.

Did Changpeng Zhao really become poor with the crash? The Binance founder’s tweet should be taken with a grain of salt. First of all, the investment was not made in his name: it was the company that had bought the tokens. Next, the trading platform is doing very well : his investment in LUNA was only a small part of his funds. CZ is also very far from being poor: Bloomberg estimates his personal fortune at more than 14 billion dollars. Changpeng Zhao and Binance are therefore doing quite well.

Binance // Source: Numerama

But Binance was not the only platform to have bought these cryptos: many companies and individuals had invested in the Terra ecosystem. The Insider media estimates that the crash of the UST and LUNA led to the destruction of 50 billion dollars, a huge financial abyss. For giants like Binance and CZ, the sum is not that impressive: the entrepreneur always sits on a colossal fortune. But for small investors, this is a disaster.

This is why CZ spoke up to encourage the founders of the Terra project, in charge of UST and LUNA, to reimburse the smallest wallets in full – and Binance last. ” Lead by example and protect users “, he wrote on Twitter on May 16. ” Binance asks the Terra project to compensate individuals first.”

For the moment, the Terra teams have not specified whether they will proceed to the total reimbursement of the smallest investors. However, 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 cryptocurrencies.

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

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