In November, the founder of Coinbase Global Inc., Brian Armstrong, he had a personal fortune of $13.7 billion. But the figure was reduced to only 2.3 billion dollars, according to the Bloomberg Billionaires Index, after a sell-off in digital currencies, which has ranged from bitcoin to ether, caused a sharp drop in the market value of Coinbase, the largest cryptocurrency exchange in the United States.
(See: How the Lunar Crash Rocked the Rest of Crypto).
Shares of the company have plunged 78% from its initial public offering (IPO) in April 2021 through Wednesday, May 11, and were down another 24% to $54.91 as of 3:00 p.m. after the company warned that trading volume and users transacting monthly are expected to be lower in the second quarter than in the first.
This has raised questions about Coinbase’s ability to resist the sharp drop in cryptocurrency prices, forcing Armstrong to come out to defend the company on Twitter.
There is not “bankruptcy risk“, not even before an event of “black Swan“And user funds are safe,” said Armstrong, the company’s chief executive officer.
(See: Bitcoin drags a drop of more than 35% this year).
The billionaire fortunes in cryptocurrencies that have surged in the last two years are disappearing after a sell-off that began with tech stocks spread to digital money.
Bitcoin, the most popular cryptocurrency, and ether they are down more than 50% from their all-time highs late last year. TerraUSD, an algorithmic stablecoin, is at risk of crashing outright. It is a far cry from what it was just a few weeks ago, when the cryptocurrency community was partying in Miami.
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While nearly all cryptocurrency holders have seen their fortunes plummet, some of the biggest and most visible losses are concentrated among the founders of exchanges, where traders buy and sell digital currencies.
(See: Nubank, ‘seduced’ by cryptocurrencies: will allow operations with them).
At least on paper, Changpeng Zhao, the CEO of Binance, has lost an even bigger fortune than Armstrong.
debuted in the Bloomberg Wealth Index in January 2022 with a net worth of 96,000 million dollars, one of the largest in the world.
On Wednesday the 11th it had been reduced to 16,000 million dollars, using as a basis for the calculation the average business value with respect to the sales multiples of Coinbase and the Canadian crypto company Digital Voyager.
Cryptocurrency exchanges in the US seem to be suffering a greater decline than their international competitors.
Trading volumes on Coinbase have fallen steadily since the beginning of the year, while Binance, more focused on the international arena, saw a spike in volume last month.
By comparison, Binance’s US-focused business saw an even steeper decline than Coinbase’s.
(See: The effects of the crash of bitcoin and other cryptocurrencies).
Tyler and Cameron Winklevoss, co-founders of rival cryptocurrency exchange Gemini, they have each lost about $2.1 billion, or about 40% of their assets, this year.
Michael Novogratz, CEO of crypto merchant bank GalaxyDigital, saw his fortune plummet from $8.5 billion in early November to $2.9 billion.
Armstrong is not the only Coinbase billionaire losing money. the co-founder Fred Ehrsam, a former operator of Goldman Sachs Group Inc., he currently has a net worth of $13 billion, a decline of more than 60% this year.
Armstrong owns 16% of Coinbase and controls 59.5% of its voting shares, according to the company’s 2022 proxy statement, while Ehrsam has a 4.5% stake and controls 26% of Coinbase. their voting shares.
Coinbase bonds have also tumbled, recently trading in line with some of the rated securities “trash“more risky.
BLOOMBERG
