2022 Crypto Crash: 4 Bitcoin Moguls Who Suffered Big Losses

The 2022 crypto crash was a harsh reality check for many Bitcoin moguls who had grown accustomed to the digital currency’s stratospheric rise in value.

The cryptocurrency crash of 2022 left a trillion dollar dent in the market, and many billionaire investors were hit hard. Some filed lawsuits to claim compensation for their losses, and some were so devastated that they even tried to take their own lives. According to Statista research, the most prominent crypto-billionaires lost a combined USD 112.7 billion by December 1, 2022. Sam Bankman-Fried, CEO of FTX Exchange and Alameda Research, became a symbol of this disaster after filing for bankruptcy in November 2022 for both businesses following their public demise. Many have compared his story to that of Bernie Madoff: one of wealth and notoriety turned into public disaster.

In this article, we examine the financial damage that these high-profile crypto kings have suffered as a result of the market collapse. Interestingly, the four crypto bosses who lost the most money in 2022 were previously considered among the richest in the crypto world.

Changpeng Zhao (CZ)

Changpeng Zhao, commonly known as CZ, has long held the title of the richest man in crypto. His wealth is heavily tied to his stake in Binance, the largest crypto exchange by trading volume, as well as an unconfirmed amount of Binance Coin tokens and other cryptos.

But when the cryptocurrency market crashed in 2022, CZ suffered the biggest loss, with his fortune dropping a staggering $87 billion, according to the Bloomberg Billionaires Index. His net worth fell to $11 billion in May 2022, and he now holds the record for the biggest financial loss in history. His demise surpassed Softbank founder Masayoshi Son’s previous record of margin-related losses of $77 billion during the dot-com bubble.

Despite the choppy waters of the crypto market in recent months, CZ has high hopes for the future of crypto, saying the market had “shown extreme resilience”. Hopefully CZ will make a full recovery when the crypto markets eventually recover.

Brian Armstrong

The founder of Coinbase, Brian Armstrong, was not exempt from the market crash last year. His net worth significantly reduced to $2.2 billion after he lost $13.7 billion. Coinbase also had a rough year due to the decline in users and investors which caused its stock value to plummet.

In response, in June 2022 the company announced significant layoffs, with 1,100 employees losing their jobs, making up nearly 18% of the total workforce. Armstrong attributed this to the economic downturn in America as well as the “crypto winter”. He revealed that they had been too ambitious to expand from 1,250 employees at the start of 2021 to around 5,000 in three months.

Underscoring how difficult it had been, Coinbase’s shares fell more than 89% in 2022, and its Q3 revenue fell by roughly three-quarters of its 2021 peak.

Gary Wang

Once valued at US$5.9 billion in March 2022, FTX co-founder Gary Wang’s fortune had dropped to zero by December 2022. The US Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) charged him and the former CEO of Alameda Research Caroline Ellison on Fraud. Both pleaded guilty to federal fraud charges previously brought by the Department of Justice (DOJ).

According to SEC filings, Wang and Ellison were in a multi-year scheme to defraud investors in FTX with their allegedly “improperly organized” setup that gave them access to funds without proper controls, causing them to make larger trades than they should have hat. In their plea agreement, both agree to cooperate with the authorities in the future.

Sam Bankman-Fried

Sam Bankman-Fried (SBF), the 30-year-old CEO of crypto exchange FTX, has been thrust into the spotlight following the collapse of both his businesses – FTX and Alameda Research – in November 2022.

In 2017, SBF founded Alameda Research and made a massive impact on the cryptocurrency trading industry. He then followed up this success with the launch of FTX in 2019, which quickly grew to become the world’s third largest exchange and attracted USD 2 billion in venture funding. With his fortune skyrocketing due to the rise of the crypto market in 2021, he gained celebrity status. However, that all changed on November 2, 2022, when CoinDesk published an article that raised questions about Alameda and FTX’s financial health.

This provoked a sale of FTT tokens by Zhao who had over $580 million worth of them, leading to an 80% drop in price and a subsequent bank run by investors withdrawing billions from the platform. The growing liquidity shortfall soon led to a US$8 billion gap that dismantled SBF’s empire and caused FTX to declare bankruptcy within days. He is now being investigated by both regulators for possible links between FTX and Alameda.

This unfortunate incident led investors to compare SBF to infamous Wall Street banker Bernie Madoff, who was convicted of fraud in 2008. Madoff orchestrated one of the most extensive financial schemes in history, resulting in a loss of more than 20 billion dollars. Bankman-Fried had similarly violated customer trust, misled others and disrupted the crypto community at large – an outcome reminiscent of Madoff’s earlier crimes.

The crypto crash of 2022 has left many investors feeling burned, but it’s important to remember that this doesn’t mean the end of cryptocurrency as a whole. The industry’s biggest players have suffered huge losses, but for those willing to take risks and put in the work, there are still great opportunities out there.

Remember that the road to success is risky.

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