Crypto-billionaires are becoming a rare breed. When Vitalik Buterin revealed he was no longer a billionaire in May, the Ethereum co-founder spoke on behalf of many cryptocurrency ultra-rich. A number of the wealthiest founders lost billions of dollars in net worth to the bear market of 2022, or “crypto winter.”
According to Forbes, the number of cryptobillionaires on the Forbes 400 list of the richest people in the United States has fallen from seven in 2021 to four this year. Their combined wealth fell similarly, from $55.1 billion to $27.3 billion, he says.
This comes as cryptocurrency holdings were hit hard by a sharp drop in prices following the collapse of the Terra blockchain in May. Bitcoin (BTC) is down over 70% from its November 2021 closing high of $69,000.
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All other major cryptocurrencies fell alongside bitcoin. Ethereum (ETH), the second-largest digital asset, has fallen 75% from its all-time high. Solana (SOL), Cardano (ADA) and Binance Coin (BNB) are all in the red.
In total, the value of all crypto assets has risen from over $3 trillion in November to $967 billion at the time of writing, according to data from Coinmarketcap. This year’s bear market is unprecedented in some ways.
This represents a combination of challenging macroeconomic conditions, geopolitical tensions, and questionable plans/decisions by crypto founders. The Bitcoin Fear and Greed Index, a tool which tracks momentum levels in the industry, currently reads “extreme fear”.
Crypto-billionaires and their declining fortunes
In June, bitcoin fell below $18,000 – and with it the fortunes of a few crypto founders and backers.
Sam Bankman-Fried, the co-founder and CEO of crypto exchange FTX, is down 23% since his fortune hit $22.5 billion in the past year, according to Forbes. With a net worth of $17.2 billion, Bankman-Fried remains the richest person in crypto. It is ranked at number 41 on the Forbes 400 list.
The 30-year-old has made big strides this year. He gave $16 million to super PACs in April, making him a top donor. He also plans to donate between $100 million and $1 billion in the next US presidential election to support the Democrats.
In crypto, Bankman-Fried has become something of a messiah. In June, he loaned BlockFi $400 million through FTX. There was an option to buy the struggling crypto lender for up to $240 million.
He also provided a $500 million loan to bankrupt lender Voyager Digital through one of his Alameda Research companies. Bankman-Fried is planning further acquisitions, according to industry media, encouraged by a cash position of around $2 billion at FTX.
Ripple’s Chris Larsen
Chris Larsen, co-founder and chairman of crypto payments company Ripple Labs, has seen his fortune grow from $6 billion to $2.8 billion in the past year. The 62-year-old’s net worth has plummeted after Ripple’s native XRP token crashed 75% since last year.
Ripple has also been affected by its long legal battle against the United States Securities and Exchange Commission. He won his case a few days ago. Over the past two weeks, the price of XRP has climbed over 30% to $0.4595 at press time.
Larsen remains on the Forbes Rich List at number 380. The business executive and angel investor has been reluctant to comment publicly on the SEC lawsuit, though he continues to engage publicly about Bitcoin.
Considered the right arm of Bankman-Fried, Gary Wang co-founded Alameda Research and FTX. The 29-year-old software engineer is worth $4.6 billion. He is on the Forbes 400 rich list at number 227.
Wang owns 16% of FTX, where he is chief technology officer. He worked at Google “where he formulated systems to aggregate the prices of millions of flights”. While Wang maintains a private life, he is credited with spearheading the growth of FTX as much as Bankman-Fried.
The fall from grace
Brian Armstrong, 39, of Coinbase Global, and co-founder Fred Ehrsam, 34, were once worth $15 billion. They have seen their fortunes plummet to $2.7 billion and $1.1 billion as the company’s shares have plunged 80% since its IPO in April last year.
While Armstrong retains his spot on the Forbes 400 rich list at number 388, the founder may have experienced one of the biggest drops in fortune. Last year, this time, it was worth $11.5 billion. Ehrsam, who left Coinbase in 2017, dropped off the rich list after his value rose from $3.5 billion.
The bear market has taken its toll on Coinbase, the largest US crypto exchange. Quarterly trade volume nearly halved to $277 billion in the fourth quarter of 2021, compared to the previous three months. The exchange makes money by charging fees on transactions.
Coinbase also laid off 18% of its workforce in June, raising the possibility of a recession that could lead to a prolonged bear market. “We grew too fast,” Armstrong said at the time.
“Our labor costs are too high to effectively manage this uncertain market. The steps we are taking today will allow us to manage this period with more confidence, even if it is very prolonged. »
Cameron and Tyler Winklevoss saw their fortunes drop to $2.2 billion each, from $4.3 billion each. With the markets crashing, the 40-year-old twin founders of crypto exchange Gemini got into music. They toured with their rock band, Mars Junction.
Both dropped off the Forbes 400 rich list. Geminin announced in June that it would cut around 10% of its purchases due to unfavorable market conditions.
Cryptobillionaires: Will they get their fortune back?
There are several crypto moguls who remain billionaires not included in the Forbes 400 list of rich people. Founders such as Changpeng Zhao of Binance, Mike Novogratz of hedge fund Fortress Investment Group and others have lost billions due to the market downturn.
However, bear markets are not uncommon on the digital market spectrum. Therefore, it is not surprising that crypto fanatics maintain that the events are only temporary – just as much as they hope things will improve in the near future.
Ethereum confounder Buterin has previously suggested that he would welcome lower crypto prices. In February, he told Bloomberg News: “People who are deep into crypto, and especially into building things, a lot of them are welcoming a bear market.”
Fred Ehrsam, co-founder and board member of Coinbase, tweeted“One thing most people don’t fully grasp is that it takes years, often decades, to go from a new infrastructure-level technology breakthrough (like cryptography) to a vibrant large application ecosystem. audience.”
The Winklevoss twins say their investments are long-term. “It’s all about perspective and HODLing for the long game,” Cameron Winklevoss wrote on Twitter in May.
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Victims of the bear market – Tech Tribune France
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