- The lawsuits filed on the grounds of running “unregistered securities” brought the net worth of Armstrong and Zhao down.
The invasive impact of legal action
The lawsuits filed by SEC against Coinbase and Binance have left a dent in their CEO’s pockets. According to the reports released by Forbes and Bloomberg Billionaires, Brian Armstrong (Coinbase) and Changpeng Zhao (Binance) have suffered heavy losses in their own net worth.
The US Securities Exchange Commission sued Binance and Coinbase on June 5 and 6 respectively. Within 30 hours of filing the lawsuits, Zhao’s net worth was slashed by $1.33 billion and Armstrong’s slumped by $289 million.
Notably, Zhao is the 54th wealthiest man in the world and the highest-earning CEO in the crypto space. Due to the lawsuit, his net worth saw a decline of 5% which amounted to 26% this week. Armstrong is the 1409th wealthiest person by Forbes and his net worth plummeted to a whopping 73% amounting to $96.9 billion.
However, the year has been a little rewarding for the Coinbase CEO so far. As per the market figures, he got a 61% increase in net worth as a result of the market rebound that happened earlier this year.
In fact, it seems they have gained reasonably well notwithstanding the recent fall. They both have seen 9% year-to-date returns this year.
The SEC found both exchanges indulging in some unfair practices. According to the regulatory body, Binance and Coinbase have offered cryptocurrencies that were considered unregistered securities.
Right after the litigation, the SEC classified 67 cryptocurrencies as securities. On the other hand, the crypto exchanges have vehemently opposed this move and are resolute to defend their operations in court.
It would be interesting to know how SEC categorized a few tokens as “unregistered securities.” The crypto community is keen to know what happens next in this case. While it’s not the first time the regulatory body sought the legal approach, we’ll have to see how this particular scenario pans out in the future.