How Binance made billions on the craze for crypto

Are you prepared for crypto to join the global economic mainstream? The digital currency is continuing to invade Wall Street. 

“Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior,” The White House said in a March 9 statement. President Joe Biden has issued an executive order directing government agencies to draft a regulatory framework for crypto. Bitcoin and Ether are beginning to make a rebound after a rocky winter. The crypto market “pushed through the $2 trillion barrier,” Reuters reported on Tuesday.

The government’s intense focus may actually be welcomed by crypto companies. “To crypto execs like Zhao, Biden’s order was the stamp of approval they had long-awaited, with all the opportunity that implies—and all the regulatory hassle too,” writes Fortune’s Vivienne Walt. 

In Vivienne’s new feature article, she delves into the world of Changpeng “CZ” Zhao, the 44-year-old founder and CEO of Binance. His net worth is about $74 billion as of late March, making him “one of the planet’s richest people.”

“Since founding Binance in 2017, he has built it from scratch to being the world’s biggest crypto exchange by a wide margin; he estimates the platform now has 100 million users,” Vivienne writes. “Binance regularly hosts far more trading volume than any other platform—for an astounding total of $34.1 trillion during the crypto boom year of 2021, according to the company—with the exchange taking a commission on each trade. Sources inside Binance say that based on that volume of trades and fees, and crypto’s projected growth rate, the company is now worth about $300 billion, nearly six times the market cap of Coinbase, its nearest competitor.”

But the path to crypto riches hasn’t been without challenges. “For Zhao, whose company has been accused of flouting rules and skimping on consumer protections to fuel its growth, the stakes are high,” Vivienne writes. (You can read the complete fascinating report here.)

There are more than 25 publicly traded companies that hold Bitcoin on their balance sheets, Quartz reported. CFOs like Zach Kirkhorn, Tesla’s “Master of Coin,” are all in on crypto. But it’s this volatility that deters many finance chiefs from putting Bitcoin on the balance sheet. 

And although there’s a growing number of individuals, such as athletes and politicians (New York City Mayor Eric Adams) who want to be compensated in crypto, it’s complicated. “There are definitely some things that are problematic,” Alan Levine, partner and co-chair of the executive compensation and employee benefits department at the law firm Morrison Cohen, recently told me. “Until Congress or the IRS weighs in, it’s going remain difficult to pay people in cryptocurrency, even if they want it. You’re not getting cash. You’re getting, basically property, like a share of stock that rises and falls with the course of the market.” 

But one thing’s for sure: as trailblazers like Zhao get more attention and demand for digital currencies increases, CFOs need to become fluent in crypto.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

Inside the Wallets of Working Americans, is the fourth annual report of Salary Finance, a financial wellness platform. The report found 45% of working Americans surveyed experience financial stress, an increase from 42% the previous two years. And 75% of respondents said inflation is impacting their finances. The percentage of employees who said they feel their employer cares about their wellbeing declined from 63% in 2021 to 57% in 2022, according to the report. The findings are based on a survey of 3,000 working Americans. 

Going deeper

In a conversation with Wharton Business Daily, Wharton legal studies and business ethics professor Kevin Werbach explains why he thinks the Biden administration’s executive order to develop a national policy on crypto is important. “We need experts working on these issues and working through the mechanisms of these agencies, so I give the administration a good deal of credit for how much work it must have taken to align all of these different groups to move forward,” Werbach said. 

Leaderboard

Hugh Gallagher was named CFO at Marathon Digital Holdings, Inc. (Nasdaq:MARA), an enterprise Bitcoin self-mining company, effective March 31. Sim Salzman, the company’s current CFO, will be transitioning to the role of chief accounting officer. Prior to joining Marathon,  Gallagher was the chief strategy officer at Global LPG, and held several senior positions at UGI Corporation and AmeriGas Propane, including president and CEO of AmeriGas Propane; VP of finance and CFO of AmeriGas Propane; treasurer and director of investor relations and treasury at UGI Corporation; director of corporate development; and director of financial planning at AmeriGas Propane. 

Mike Schwartz was named CFO and COO at Recreational Realty LLC, a developer of specialized recreational vehicle and marine storage facilities, effective April 11. Schwartz joins from CyrusOne, where he most recently served as VP of finance. He played an instrumental role in the acquisition of CyrusOne by KKR and Global Infrastructure Partners in March 2022.

Overheard

“I mean, it's probably one of the most difficult guides since 2008 and '09 because we're right in the middle of this disruption from Ukraine and Russia.”

—Gary Friedman, CEO of RH (formerly known as restoration hardware), told investors during a quarterly earnings call on Tuesday that rising uncertainty due to geopolitical tensions and inflation have made issuing future guidance on earnings the most difficult task since the Great Recession era, as reported by Fortune.