Crypto Billionaire Sold His Apartment to Buy Bitcoin (Changpeng Zhao)

If you believe in Bitcoin’s future you’ll see why taking huge risks sometimes doesn’t make sense.

Changpeng Zhao, aka CZ, went from zero to Cryptocurrency Billionaire in 8 months.

He’s now ranked as the 30th richest person in the world, with a net worth estimated at $33 billion as of October 2022.

Things were sometimes more complex for the Chinese-born Canadian immigrant. Growing up as a teenager, CZ would have to pitch in to cover the household expenses, working at McDonald’s, flipping burgers and working overnight shifts at a gas station.

Like most of our Cryptocurrency origin stories, CZ learned about Bitcoin through a friend while playing poker.

Mine was through a Gary Vee video.

That poker game would set off a chain reaction of events leading to CZ selling his apartment to go all in on Bitcoin during a bull run in 2014.

It’s unclear how much Bitcoin he bought, but CZ says his purchase price was $600, and Bitcoin crashed to $200 in a few months.

If you’ve been in Cryptocurrency long enough, you’ll know what it feels like to purchase the top.

Developments happened in the area where CZ sold his apartment, resulting in the property’s value doubling soon after the sale.

However, Bitcoin’s price plummeted 30% from CZ’s purchase price.

This is a minor correction by today’s standards, but it forced CZ to return to work and get an office job. CZ says it didn’t change his Bitcoin narrative, and the financial difficulty did not make him sell his Bitcoin.

CZ:

“At that time, I was under pressure. Was everyone wrong, or was I just wrong?

I’m probably the one wrong. But I couldn’t see why I was wrong because I thought it (Bitcoin) was the future.

In 2001, when the dot-com bubble burst, Amazon, eBay and even Google lost 98% of their value. Everyone went through this phase.”

Now a Billionaire, CZ has said he would never even consider selling his Bitcoin or other cryptocurrencies to buy a house. But the opposite was seen as entirely crazy at the time.

And CZ confirmed most of his original purchases of Bitcoin he still owns today.

CZ:

“99% of my assets are in cryptocurrency, and it’s all in BNB and a small fraction of it in Bitcoin,”

“I don’t invest in houses and wouldn’t buy a house right now. Liquidity is very weak.”

CZ admitted for a minute, when the Bitcoin price crashed, and he had everything on the line, there were some doubts. He said it does take a couple of cycles in Bitcoin and Cryptocurrency to nail down your patience.

CZ:

“I always believed in the future of crypto, but at the back of your head, you sometimes have to wonder, what if I am wrong and Bitcoin goes to zero?

After going through the cycle once, you learn to adopt a longer view.”

Binance Was Born.

CZ is an unassuming character, and no one knows much about his personal life. Apart from that, he had a love affair with his Binance co-founder, who lives in America and has a child.

Binance is by far the largest cryptocurrency exchange by trading volume. They started with an initial coin offering that raised $15 million.

Trading began on the exchange eleven days after the raise, and in less than eight months, CZ grew Binance into the world’s largest cryptocurrency exchange.

CZ now holds 100% of his liquid net worth in Cryptocurrency, mostly in Binance’s native token, BNB.

In 2022, he made a further investment of $500 million to help Elon Musk with the acquisition of Twitter.

It resulted in widespread speculation whether Twitter will become decentralised and use BNB as a medium of exchange on the platform or just their exchange services.

CZ Started the Recent Market Crash by Publicly Telling People He Was Selling FTT (FTX’s Native Token).

It shows how well he manages risk, although an article he read triggered the sell-offs.

Firstly if you have yet to hear, FTX was a competitor exchange of Binance. Their founder Sam Bank-Fried, aka SBF, used customer deposits to trade with and got loans out against them.

CZ was FTX’s first investor, and as a part of his equity share in the company with given a share of FTX’s native token, FTT.

Let me know if I’ve overdone the acronyms in this blog.

Before the FTX capitulation, Binance CEO CZ Tweeted that his firm intended to sell its holdings of FTX’s token, FTT.

Zhao posted a Tweet after a report from CoinDesk showed that the bulk of FTX’s holdings and sister company Alameda Research was in FTT.

The Tweet resulted in a cascade of withdrawals on the FTX exchange, and the FTT token began to free fall.

A massive issue for FTX during the cryptocurrencies version of a bank run was that it only had $1 billion in assets against $9 billion in liabilities, so it would need more capital to cover customers’ withdrawals.

In a desperate attempt to stop customers from withdrawing funds, SBF lied, in a now-deleted tweet, that everything was fine with FTX and it was just Binance doing what competitors do.

It all played out on Twitter, which I can tell you is the hub of cryptocurrency news and information.

In a stunning turnaround, CZ was looking to buy FTX following the due diligence process.

Two hours into their due diligence, CZ pulled out of the sale. They left a short statement on, of course, of all places, Twitter.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com”

Final Thoughts.

I will never suggest selling your house to invest in Bitcoin.

But you must admit CZ’s early move in 2014 has paid off handsomely. All it comes down to what your aversion to risk is.

Maybe CZ was so sure about Bitcoin that it didn’t feel risky.

The way CZ operates Binance as a company gives me confidence in his risk management and tells you that he is, in fact, risk-averse.

He could have seen it as more of a risk to have kept his apartment, knowing the potential demand for Bitcoin in the future.

Not to sound like Rob Kiyosaki, but we all come from a world of “pay your house off, save money and invest in the stock market.”

I often question why and if this method is still the best route.

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This article is for informational purposes only; it should not be considered financial, tax or legal advice. Consult a financial professional before making any significant financial decisions.