This week’s U.S. government crackdown on crypto trading platforms Binance and Coinbase come at a hefty price tag for their billionaire founders, Changpeng Zhao and Brian Armstrong.

Nearly $2 billion of their combined wealth has been wiped away after the Securities and Exchange Commission, which claims responsibility for regulating virtually all of the 25,000 digital tokens in existence, filed lawsuits alleging both crypto exchanges operated unlawfully.

According to the Bloomberg Billionaires Index, Coinbase CEO Armstrong saw his wealth melt by $361 million to $2.2 billion as shares in the publicly traded company sank by 12% on Tuesday.

This loss is paltry once compared with the $1.4 billion plunge suffered by Zhao, the richest of all crypto bros and known more colloquially as CZ.

His wealth shrank to $26 billion, in part after SEC Chair Gary Gensler singled out the founder of privately held Binance, the world’s largest crypto trading platform, for an “extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”

Their wealth had been climbing since the start of this year as the price of Bitcoin and other digital assets rebounded. Zhao’s fortune soared by 117% before this week’s drop, while Armstrong’s jumped by 61%.

By comparison, the other billionaires on Bloomberg’s wealth index were up a combined 9%.

Unlike the anger that erupted when Sam Bankman-Fried’s FTX went bankrupt amid an apparent web of lies and fraud, the crypto community has largely rallied around Zhao, Armstrong, and their two exchanges.

Although they are centralized like much of traditional finance, or TradFi as it’s pejoratively known, Binance and Coinbase play important roles in facilitating the broader adoption of crypto.

That solidarity stems in part from suspicions this week’s coordinated attack was politically motivated with the purpose of maintaining the dominant role of conventional central bank–backed currencies in all commerce.

Charles Hoskinson, creator of the Cardano blockchain and its native ADA coin, the world’s seventh most valuable cryptocurrency, pitched the SEC’s move against the digital ecosystem in almost Manichean terms.

Regarding the SEC complaint against us today, we’re proud to represent the industry in court to finally get some clarity around crypto rules.

Remember:

1. The SEC reviewed our business and allowed us to become a public company in 2021.

2. There is no path to “come in and…

— Brian Armstrong June 6, 2023

In remarks he posted to social media on Tuesday, he went so far as to liken the industry’s common struggle for what he termed economic freedom from government fiat to the time when his Norwegian ancestors fought against the Nazis.

“We will see a day where, when you have money in your wallet, you own that—not an IOU from an organization that at any time can take it from you for no particular reason, or you violated a particular policy or agenda,” said Hoskinson. “The reality is we’re facing the entire global order.”

Gensler helped fuel the community’s suspicions on Tuesday when he argued that crypto serves no real purpose since traditional finance such as banks and stock exchanges already execute payments virtually.

“Look, we don’t need more digital currency. We already have digital currency: It’s called the U.S. dollar,” he said in an interview with CNBC. “It’s all digital right now—the investing world—so what is the real underlying value of these tokens?”

Appearing on the same broadcaster the following day, Armstrong said he was “disappointed” by the SEC’s actions, arguing they were “not good for America.”

“We don’t need the government picking and choosing our technology winners. Let’s let the market decide,” he said.