Binance’s BNB token surged to a record high of $717.48 last week as Changpeng Zhao, the company’s co-founder, commenced a four-month prison sentence.
This rally revealed Zhao’s unique status as the wealthiest individual ever to serve time in a U.S. federal facility.
Zhao, often referred to as “CZ” within the cryptocurrency community, reported to a California prison on Tuesday to begin his sentence.
The charges stem from his failure to adequately safeguard Binance, the world’s largest cryptocurrency exchange, against money laundering activities.
This legal battle culminated in Binance agreeing to a historic $4.3 billion fine to settle allegations with U.S. authorities, in addition to Zhao paying a $50 million personal fine.
Despite these challenges, BNB’s value has more than doubled since the beginning of the year, lifting its market capitalization to $109 billion, according to CoinGecko data.
Binance’s resilience during this period has been reflected in its assets under management, which have grown from approximately $80 billion in early January to $125 billion today.
Holders of BNB benefit from trading fee discounts on Binance and use the token to settle fees on the BNB Smart Chain, a blockchain that supports a variety of crypto applications, including games and decentralized exchanges.
This broad utility, along with strong demand, has driven the token’s impressive performance.
The recent surge in BNB’s price was hinted at by derivative market trading patterns observed in late May.
Spot demand for the token began to pick up in June, with buying activity consistently outpacing selling between June 2 and June 5, according to Kaiko analyst Dessislava Aubert.
BNB trades on more than a dozen centralized exchanges, distinguishing it from other exchange tokens that are typically limited to their respective platforms.
Nonetheless, Binance still accounts for 85% of BNB’s global trading volume.
Binance has faced intense scrutiny for alleged anti-money laundering and sanctions breaches, with accusations that it failed to prevent access by militant groups such as Hamas and Al Qaeda.
However, the company’s dominance in the crypto market remains unshaken, as evidenced by BNB’s meteoric rise.
Changpeng Zhao’s personal wealth, estimated at $38.5 billion, is largely tied to BNB. Despite the legal challenges, his net worth has increased by $4.1 billion in 2024, positioning him as the 40th richest person globally, according to the Bloomberg Billionaires Index.
Zhao’s holdings of BNB, though undisclosed, are significant, with a 2017 whitepaper from BNB’s initial coin offering indicating that 80 million tokens were allocated to the founding team.