Cryptocurrency billionaires including the founders and CEOs of the largest trading platforms have seen their personal fortunes wiped out by the latest market crash.
Coinbase has lost half of its value in the past week, with the majority of the sell-off coming even before the company reported a US$430 million net loss in the first quarter amid declining users and sales.
A steep sell-off in cryptocurrencies from bitcoin to ethereum is behind the decline, with shares in the United States' largest exchange now down 84 per cent since debuting on the stock market in April 2021 to close at US$53.72 on Wednesday.
As of Thursday morning, many top cryptocurrencies were at their lowest levels since late 2020.
That's seen the net worth of Coinbase founder Brian Armstrong plummet.
Armstrong had a personal fortune of US$13.7 billion in November, according to the Bloomberg Billionaires Index, but that is now just US$2.2b — a loss of US$11.5b.
Taking to Twitter, Armstrong sought to reassure investors and customers that "we have no risk of bankruptcy … even in a black swan event like this". "Your funds are safe at Coinbase, just as they've always been," he said.
Bloomberg reports that hardest hit has been Binance chief executive Changpeng Zhao, who debuted in the index in January with a net worth of US$96b. By Wednesday, that was estimated to be just US$11.6b, an eye-watering fall of US$84.4b.
Tyler and Cameron Winklevoss, co-founders of crypto exchange Gemini, have each lost about US$2.2b, or 40 per cent of their wealth this year, while Sam Bankman-Fried, CEO of crypto exchange FTX, has seen his fortune halve since the end of March to US$11.3b, according to the report.
Michael Novogratz, CEO of crypto merchant bank Galaxy Digital, has seen his fortune plummet from US$8.5b to US$2.5b since November. Novogratz has promoted terra, the troubled "stablecoin" now on the verge of complete collapse.
In January he proudly displayed a new tattoo of luna, a crypto token in the terra ecosystem.
"I'm probably the only guy in the world that's got both a bitcoin tattoo and a luna tattoo," he said at a bitcoin conference in Miami last month.
Terra, which is supposed to be pegged to the US dollar, has lost around half of its value this week, sparking panic in the already febrile world of crypto assets.
At one stage terra was trading at 30 cents on Wednesday before recovering to around 50 cents, according to the CoinGecko website.
So-called stablecoins like terra are meant to be less volatile than cryptocurrencies such as bitcoin or ethereum.
Their peg to traditional currencies is meant to offer investors more certainty and security.
But terra and several other stablecoins are not backed by any revenue streams, instead relying on algorithms to rapidly move funds between cryptocurrencies as they rise and fall in value.
Luna Foundation Guard, which backs terra, said on Monday it had deployed the equivalent of US$1.5b in cryptocurrencies to stabilise the coin.
The coin's founder Do Kwon said on Twitter on Tuesday he was about to present a recovery plan.
"I understand the last 72 hours have been extremely tough on all of you — know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this. Together," he wrote on Wednesday, as he outlined a series of measures.
"Terra's focus has always oriented itself around a long-term time horizon, and another setback this May, similar to last year, will not deter the #LUNAtics. Short-term stumbles do not define what you can accomplish. It's how you respond that matters."
But terra continued to crash, perhaps caught up in a broader sell-off of cryptocurrencies that saw bitcoin plunge this week to its lowest value since last July.
US Treasury Secretary Janet Yellen told a Senate committee on Tuesday that the terra episode illustrates "that there are risks to financial stability and we need a framework that's appropriate".
Anto Paroian of ARK36 hedge fund, which specialises in crypto assets, said regulation in the long term would be a "net positive for the crypto space".
"But if stablecoin issuers get regulated as strictly as banks, it could suffocate one of the most innovative, thriving, and important sectors of the crypto market," he added.