Context In the Blockchain: Cryptocurrency Whales
My name is David, and I’m new to the world of cryptocurrency. Often times, it’s hard as a beginner to trace a story back to its roots. Whenever a piece of news happens, I miss out on all the historical context that can accompany it.
Follow me on my journey in my series “Context in the Blockchain,” where I explore the significance behind the different moving pieces in the blockchain world and provide you background from what I learn. In this article, I examine the definition of a “whale,” who some of the major players are in the space, and how they made their cryptocurrency fortunes.
General Overviw: Cryptocurrency Whales
Recently, I came across a cool graphic on Statista about “cryptotycoons” and whales. While some of them are people that I’d already heard of, I thought it’d be interesting to familiarize myself with the come-up of the top five whales in the world of cryptocurrency.
Chris Larsen
Perhaps best known in the cryptocurrency community as the founder and current chairman of Ripple, Chris Larsen has been a pioneer in merging the worlds of financial services and technology for decades. He’s been very pro-consumer in his mission and his companies reflect this value.
Before founding Ripple, he co-founded an online mortgage lending company called E-Loan in the late 90s based on his own personal experience as a mortgage lender. In true pro-consumer fashion, E-Loan was the first company ever with free access to FICO scores for customers. His next project was a peer-to-peer marketplace lending platform called Prosper Marketplace. Notably, it was the first company of its kind in the United States.
When he resigned as CEO of Prosper in 2012, he moved on to his third project, OpenCoin, which would eventually be renamed Ripple Labs in 2013. Ripple’s goal is to streamline currencies by negating fees and wait times. Their payment network’s digital asset is XRP, the third largest coin by market cap right now. Larsen’s 5 billion XRP make him a billionaire in today’s bleeding market. At Ripple’s peak, his net worth was over $37 billion.
Joseph Lubin
ConsenSys is currently one of the better known blockchain software companies on the market, and it boasts over 800 employees. It’s a software foundry with a focus on development in Ethereum. The founder, Joseph Lubin, happens to be one of a handful of Ethereum co-founders.
Back in 2013, Bitcoin was beginning to gain some serious traction, hitting a record $800, up from its 2012 price of roughly $13. When Vitalik Buterin, the brain behind Ethereum, wrote his white paper, it proved to be a rallying call to some blockchain developers, among them Lubin, to help develop this new idea.
This led Lubin to be present at the moment of the Ethereum crowdsale; it’s been rumored that he is both the biggest buyer and the largest holder of the crowdsale and of Ethereum. Despite claims that he has been selling his treasure trove, he’s an Ethereum whale if there ever was one.
Changpeng Zhao
Also known as CZ, Zhao is known primarily for being the founder of top global exchange Binance. Perhaps the craziest part of its dominance among exchanges is that Binance is just about a year old as a company at time of writing (August 2018). While CZ had his fair share of challenges building Binance from the ground up so quickly (such as having to move his headquarters from China to Japan/Hong Kong to Malta), the exchange has had all the part to play in his amassed cryptofortune. Binance Coin, the native coin on Binance used to discount trades, rocketed from $0.10 to over $24 at its peak. It should be noted that while his personal claims of his multibillion fortune were never verified by a third party, his incredible success is undisputed and it would not be surprising if his claims of wealth were true.
CZ worked at several different exchange trading companies, starting his career at The Tokyo Stock Exchange, moving to Bloomberg Tradebook, and even starting his own company called Fusion Systems that made trading systems for brokers. It was at these places that he picked up many of the insights that laid the foundation for his present day fame and success.
CZ’s first encounter with Bitcoin was at the poker table. He played in a group of cryptocurrency enthusiasts which included the likes of Bobby Lee, who bought the digital asset company BTC China (BTCC) and is the brother of Litecoin founder, Charlie Lee. Ron Cao, a pro-crypto venture capitalist who invested in BTCC, convinced CZ to look into Bitcoin, which led to CZ working at places like Blockchain.info and OKCoin. Shortly thereafter, CZ decided to make his own exchange: Binance — a reliable platform focused purely on crypto-to-crypto trading. The rest is history.
Cameron & Tyler Winklevoss
The Winklevoss twins are known for their role in the origin story of social media giant Facebook and are famously portrayed as prominent characters in David Fincher’s “The Social Network.” Spoiler alert (if you haven’t seen the 8 year old movie): the value they earned in their settlement equaled over $100 million, which I assume is where most of the $11 million Bitcoin investment came from. They bought in when Bitcoin was at $120, which saw their fortunes grow to $1 billion during Bitcoin’s peak, making them the first publicly-known Bitcoin billionaires.
They also own an exchange, Gemini, that places an emphasis on cooperating with the relatively strict U.S. regulators. Gemini is one of the few companies that are licensed to operate in the state of New York, owning charters adhering to the uncompromising BitLicense requirements. You can learn more about these New York regulations in my BitLicense article.
The twins hold the belief that Bitcoin will be a multi-trillion dollar asset and “are in it for the long haul.” This belief is what led them to hold their $11 million investment all that time — even when it lost over 80% of its value from the 2013 peak in the bear market of 2015. This year, the cryptocurrency markets have been getting gutted following the last bull run, but it’s safe to say that despite the negative conditions, the Winklevoss twins are ‘hodling’ their cryptofortune.
Matthew Mellon
Mellon was a businessman with an illustrious background descending from the Mellon and Drexel families (think Drexel University and Carnegie Mellon). Mellon was known for being a huge bull on Ripple & XRP but is not a particular fan of other cryptocurrencies. He has been attributed with the following quote:
“Crypto is scary and dark. It’s anti-America. I am pro-America, pro-business, and pro-bank. That’s why I went with Ripple.”
He ended up dropping $2 million into XRP at a time when it was rare for people to invest in crypto at all, and by the January 2018 peak, his XRP fortune was worth a cool $1 billion.
Sadly, he passed away quite recently, and it’s unknown what his actual holdings of XRP at the moment were/are. The amount might not even matter, as his unexpected death has left the keys to his accounts unknown and inaccessible — the XRP is virtually locked away forever.
Conclusion
It’s uncertain if these are actually the top five whales because of how volatile the coin prices are and the difficulty with discerning someone’s true cryptocurrency holdings. Regardless of that, they’re still incredibly rich. Noticeably, they’re not just early investors, but they’re also almost all founders. They created their own value - Joseph Lubin with Ethereum, Chris Larsen with XRP, and so on. People are always looking for “the next Bitcoin,” but my takeaway is that the best way to find the next big thing is to build it yourself.
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