• Changpeng Zhao, also known as CZ, has been one of the wealthiest people in crypto.
• His rivalry with Sam Bankman-Fried nearly saw Binance save FTX from bankruptcy.
• But Binance had its own issues: Zhao has pleaded guilty to anti-money laundering charges, and could be imprisoned for up to three years.

Sam Bankman-Fried isn't the only crypto king to see his empire fall.

Changpeng Zhao, also known as CZ, was one of the wealthiest people in the industry as founder and CEO of crypto exchange Binance. In November, however, he stepped down from his role and pleaded guilty to charges that Binance violated US anti-money laundering requirements. 

On Tuesday, the US Department of Justice said in a sentencing memo that prosecutors recommend he serve three years in prison and pay a $50 million fine.

Here's the story of Zhao's dramatic career rise and fall:

Changpeng Zhao is the founder of Binance, the world's largest cryptocurrency exchange.

Zhao — who's often known as CZ — is one of the most prominent people in cryptocurrency, and has been the wealthiest person in the industry.

With a net worth of $42.6 billion, he's listed as the 29th-richest person in the world, according to the Bloomberg Billionaires Index.

But crypto winter has taken a toll across the industry, and Zhao is no exception. His real-time estimated net worth is a far cry from the peak of his personal wealth: His net worth peaked at $95.9 billion earlier in 2023, the Bloomberg Billionaires Index shows.

Zhao's interest in cryptocurrency began in 2013 when he first learned about Bitcoin, according to a 2018 Forbes report. His career in the up-and-coming digital currency industry started at Blockchain.info, where he served as the head of development.

Zhao founded Binance in 2017 and powered it to become the biggest cryptocurrency exchange by trading volume. The exchange handles some $76 billion in daily trading volume, Protocol previously reported. In 2021 alone, Binance generated over $20 billion in revenue, according to Bloomberg.

Editor's note: This story was first published in October 2022 and has been updated to reflect recent developments.

Zhao was born in a rural village in Jiangsu province in China in 1977 to a family of teachers.

Zhao, who is Chinese-Canadian, moved to Vancouver in the late 1980s with his family, according to Forbes.

Zhao's father, Shengkai, was a professor who was exiled to the countryside during the Cultural Revolution in China, according to the Maclean's report.

Zhao said in a September blog post that his family had to wait in line outside the Canadian embassy for three days to procure visas. He added that he was "lucky to have been able to leave at that time."

Shengkai immigrated to Canada to pursue a doctorate degree at the University of British Columbia, per Maclean's. After the Tiananmen Square protests in 1989, Zhao and his family followed his father and moved to Vancouver. 

Zhao said he experienced food rationing growing up in rural China. "You get a ticket to buy meat," Zhao told Fortune in a March interview. Zhao told Maclean's that it wasn't until he moved to Canada that he ever drank fresh milk, because it was so rare to find it in China.

When Zhao moved to Canada, he held a number of part-time jobs, according to the Maclean's report.

He started working at McDonald's when he was 14 and worked there for two years, Dewi Mustajab, a spokesperson for Binance, told Business Insider.

Zhao also worked at a Chevron gas station and as a referee for volleyball games in his teens to earn money, per Maclean's.

Zhao said in the blog post that moving to Canada "changed my life forever." He added that he spent his "best years as a teenager" growing up in Vancouver.

Zhao is known to be frugal: He doesn't own cars, yachts, or luxury watches. Instead, he has digital watches like the Apple Watch, and he recently bought a Toyota Velfire van, Mustajab said.

Zhao studied computer science at McGill University in Montreal, the same school where his father worked as a visiting scholar.

Zhao's interest in technology was fueled by a $14,000 286 DOS computer that his father — "a math whiz and programmer" — bought when was Zhao was in his teens, per Maclean's. Before attending McGill, Zhao enrolled in programming classes in high school and started coding when he was just 16 years old, per Bloomberg.

After graduating from university, Zhao worked first on the Tokyo Exchange, and from 2001 to 2005, on Bloomberg's Tradebook, Mustajab said.

In 2005, Zhao quit the corporate life and moved to Shanghai to become a partner at the trading system company Fusion Systems. According to Zhao's LinkedIn page, he left the company in December 2013.

The vast majority of Zhao's multibillion-dollar wealth comes from his controlling stake in Binance Holdings, per Bloomberg.

While Bloomberg estimates Zhao is worth around $42.6 billion from his majority stake in the cryptocurrency platform, it's not a complete picture of his wealth. Bloomberg said it does not include cryptocurrency directly held by Zhao in his net worth, as the amount is not publicly available. 

Zhao has personal cryptocurrency holdings in Bitcoin and Binance Coin, per a September report by Bloomberg. In 2021, Binance had over 90 million users, Bloomberg reported, citing an estimate from Zhao.

Zhao is said to have a considerable amount of wealth from Bitcoin, having bought $1 million worth of the digital currency when it was just $600 a unit, per Maclean's.

Binance declined to confirm Zhao's net worth and the source of his wealth to Business Insider.

But Zhao's journey at Binance has been far from smooth sailing — the company has been embroiled in several controversies.

In October, some $570 million worth of cryptocurrency traded on Binance was stolen in a blockchain hack, according to the New York Times. Zhao told CNBC in an October interview that no users had lost money in the attack, and that "software code is never bug free." The Binance hack is one of the biggest cryptocurrency hacks of all time.

Binance said in a blog post that in the event of a hack in the future, its validators will decide if the hacked funds will be frozen. The decision would be made through a series of "on-chain governance votes" — the system that manages and implements changes to the blockchain. Binance added they would also consider implementing a "bug bounty reward system," so users are incentivized to report bugs.

"Nearly $570 million were minted and taken by the hacker, $100 million are unrecovered and moved off chain by the hacker. No users or users funds affected," Mustajab said.

Binance has also been criticized for its ties to China. Binance only delisted Chinese yuan-based trading pairs on the exchange in 2021, and served customers in China for several years, according to September article by Protos. Chinese authorities banned all crypto-related transactions in September 2021.

Zhao responded to these allegations in a blog post published in September, where he clarified that Binance was never incorporated in China and said it does not "operate like a Chinese company culturally." He added that he is "a Canadian citizen, period."

Binance also garnered controversy for enabling Iran-based users to trade cryptocurrencies on the exchange despite US-imposed sanctions, according to a July report by Reuters. Binance informed traders in Iran to liquidate their accounts in November 2018, but seven traders continued until September 2021 to use the account even after the ban. Binance did not respond to Reuters' requests for comment at the time.

Zhao was known for his rivalry with FTX cofounder Sam Bankman-Fried. In 2022, Binance looked set to rescue SBF's firm from bankruptcy, before backing out of the deal.

Binance signed a non-binding agreement to acquire FTX, Zhao said in a Twitter post on November 8, 2022. At the time, FTX was the third largest cryptocurrency exchange by trading volume after Binance and Coinbase, before filing for bankruptcy three days later.

It all started with a public spat on November 6, 2022, when Zhao announced on Twitter that Binance would be liquidating its FTT tokens, the cryptocurrency of FTX.

Anthony Scaramucci, who sold 30% of his business to FTX, told Business Insider in January 2023 that Bankman-Fried had been saying "nasty things" about Zhao during a fundraising tour in the Middle East – which may have prompted Binance to sell off its FTT holdings.

In a Twitter post, Bankman-Fried said that Zhao was "trying to go after us with false rumors," and that FTX and its assets "are fine."

But then Binance pulled out of the deal, and FTX filed for bankruptcy. SBF was later found guilty on multiple fraud charges and has been sentenced to 25 years in prison.

Binance then ran into legal troubles of its own, after the CFTC alleged it had violated trading rules.

In March 2023, the Commodity Futures and Trading Commission sued Zhao, Binance, and its former chief compliance officer, Samuel Lim, for allegedly violating trading rules. 

It alleged a "willful evasion of federal law" because Binance ignored requirements to register the exchange, and helped customers to evade its "ineffective compliance program."

The CFTC said Binance didn't require customers to provide ID, and "failed to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering."

The filing shows officers discussing transactions from the Palestinian militant group Hamas. "Like come on. They are here for crime," Lim said in internal communications, per the filing. 

Zhao has split his time between Dubai and France. He was previously based in Singapore.

Zhao moved to Dubai in late 2021, where he leases an office to run what Bloomberg described as "a new phase" of Binance. Zhao also owns an apartment and a minivan in the city, the publication reported. 

"I have always liked placed with diverse cultures," Zhao told the Gulf News in an August 2022 interview. He described the city as "very pro-crypto," according to a 2021 interview with Bloomberg.

Previously, Zhao lived in Singapore from 2019 to 2021. The city-state spent hundreds of millions of dollars investing in the sector amidst a crackdown on the industry in the US, UK, and China.

In November 2023, Zhao pleaded guilty to anti-money laundering charges and stepped down from his role as CEO of Binance.

Binance will pay a $4.3 billion fine in response to the verdict.

Part of the fine will go toward settling the lawsuit brought by the CFTC earlier this year, which accused Binance and Zhao of failing to stop illegal trading activity on the crypto exchange. 

The crypto exchange is also pleading guilty to related charges, which could potentially put an end to a five-year Department of Justice investigation.

In April 2024, the Justice Department recommended Zhao be sentenced to three years in prison and have to pay a $50 million fine.

Zhao's attorneys in response suggested he be sentenced to probation, arguing, "No defendant in a remotely similar [Bank Secrecy Act] case has ever been sentenced to incarceration. Mr. Zhao should not be the first."

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• Four solar flares appeared to erupt on the sun at the same time on Monday night.
• NASA video shows the simultaneous eruptions sent rapid bursts of bright light from the sun's surface.
• There is no threat to Earth, but solar flares have the potential to cause geomagnetic storms.

The sun is furiously demanding our attention again, flexing near the peak of its power with four eruptions at the same time.

Video footage from NASA's Solar Dynamics Observatory shows that, around 11:30 p.m. Eastern Time on Monday evening, four solar flares erupted at once across the visible surface of the sun.

The rare quadruple eruption, shown below, is not an immediate danger to us on Earth.

Solar flares can send solar material screaming toward Earth, causing geomagnetic storms in our planet's atmosphere.

That can lead to GPS disruptions and radio blackouts, or bring the beautiful northern lights further south.

Indeed, a radio blackout occurred shortly after the flares, according to the Space Weather Prediction Center at the National Oceanic and Atmospheric Administration, though it was not clear from the agency's report whether this was linked.

"These things are very difficult to forecast, but I wouldn't expect too much geomagnetic activity from these particular events," Mathew Owens, a professor of space physics at the University of Reading, told Business Insider in an email. "We might get something of a glancing blow from one of them in a day or two."

The SWPC did not immediately respond to a request for comment. Though these eruptions were facing Earth, as of Wednesday morning the center wasn't forecasting any geomagnetic storms for the next three days.

A 'super-sympathetic' solar flare event

The simultaneous and powerful flares probably resulted from one underlying trigger, in a phenomenon known as a "sympathetic solar flare."

Magnetic loops at the outermost part of the sun, called the corona, can connect sunspots or filaments. When one explodes, it creates an instability in these magnetic forces that can set off other eruptions, Spaceweather.com explains.

It's a "domino effect," Owens said, "where one region becomes unstable and sets off activity in a bunch of other locations, often at great distance."

Sympathetic solar flares usually involve only two concurrent explosions, making this flare a "super-sympathetic" one.

"This is indeed a fascinating event. It's quite rare to find sympathetic flaring at four locations," Daniel Verscharen, a physicist and associate professor of space plasma at University College London, told BI in an email.

Scientists still don't understand the exact mechanism behind sympathetic flares.

"A likely explanation is that one flare erupts and triggers a disturbance that travels through the solar corona," Verscharen said. "This disturbance could be a shock wave that travels from the first flare around the sun. When this disturbance encounters another active region, it may trigger that region to become unstable and erupt as well."

The sun is peaking

Though this event appears striking, it's exactly the right time for rare events on the sun. Our star is near solar maximum, the peak of its 11-year cycle, where it becomes hyperactive.

That's why the last year has brought a barrage of solar flares, eruptions, and coronal holes that send winds of plasma and magnetically charged particles washing over Earth.

Scientists aren't yet sure whether the sun has already hit solar maximum, but if it hasn't, then maximum is likely to occur within the next year.

From then on, solar activity will decline for years, meaning less radio and GPS disruption on Earth, as well as far fewer chances to see the northern lights.

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• Independent presidential candidate Robert F. Kennedy Jr.'s large family keeps speaking against him.
• Most of them have endorsed President Joe Biden.
• Several have said Kennedy's long shot campaign will hurt Biden's reelection chances.

Since the day he declared for office, Democratic-turned-Independent candidate Robert F. Kennedy Jr. has been chastised by his fellow Kennedys for being a threat to President Joe Biden's chances at reelection.

Many of them endorsed Biden over their relative during a campaign stop in Philadelphia in April. Kennedy, whose campaign could hurt Donald Trump's reelection chances, brushed it off in a lengthy social media post highlighting his affection for them.

"I hear some of my family will be endorsing President Biden today," Kennedy posted. "I am pleased they are politically active — it's a family tradition. We are divided in our opinions but united in our love for each other."

Other family members have kept their support much more low-key.

"We love our brother. We love our party. And we love our president," Christopher Kennedy told Politico shortly after RFK Jr. decided to run as an Independent.

Many of his relatives haven't been nearly as kind when speaking out against Kennedy, as seen below:

Kerry Kennedy

Kerry Kennedy, Robert's sister, endorsed President Joe Biden during a rally in April that featured other family members, arguing that Biden and Trump are the only two candidates that matter in 2024.

"President Biden has been a champion of all the rights and freedoms that my father and uncle stood for," Kerry Kennedy said, adding that "The Kennedy family endorses Joe Biden for president."

Kerry Kennedy has been harshly critical of her brother, including when he shared the unfounded claim that COVID-19 was "ethnically targeted" to avoid Ashkenazi Jews and Chinese people. Kennedy later said his comments were not antisemitic.

"I strongly condemn my brother's deplorable and untruthful remarks last week about Covid being engineered for ethnic targeting," Kerry Kennedy said at the time. "His statements do not represent what I believe or what Robert F. Kennedy Human Rights stand for, with our 50+-year track record of protecting rights and standing against racism and all forms of discrimination."

Kerry Kennedy is directly involved in shaping her father's legacy as president of Robert F. Kennedy Human Rights, a nonprofit organization. She also wrote a 2018 book about RFK's legacy that is based on interviews with celebrities like Bono and world leaders like President Barack Obama.

Joseph Kennedy II

Former Congressman Joseph Kennedy II said he and some of his family members would continue to express their disagreement with his brother's presidential campaign.

"We cannot do anything that in any way, strips even one vote from President Biden. You put the name Kennedy on the ballot and Democrats are going to feel torn," Kennedy II told reporters after the Biden endorsement rally in April. "We are trying to make them understand that this is an issue that they do not have to feel torn about."

Kennedy II represented Massachusetts in Congress for over a decade, until 1999. Before leaving Washington, he ruled out a gubernatorial run. Kennedy also declined to run for the so-called "Kennedy seat" in the US Senate after the death of his uncle, Ted Kennedy, in 2009.

Kathleen Kennedy Townsend

Former Maryland Lt. Gov. Kathleen Kennedy Townsend has also endorsed Biden.

"Honored to stand with my family as we endorse Joe Biden who will continue to protect our rights our freedom and our democracy in this moment of deepest peril," she wrote on X after Biden campaign event that featured some of the family members.

Townsend made history in 1994 when she was elected Maryland's first female lieutenant governor in a close election. She had previously become the first Kennedy to lose a general election when she lost a bid to represent Maryland in Congress in 1984. Townsend was just 16 years old when her father was assassinated. Secret Service agents accompanied her, RFK Jr. and Joseph Kennedy II, as they flew out to California.

Townsend sided with her brother in a push to reopen the investigation into RFK's assassination, concluding that Sirhan Sirhan may not have fired the fatal shots.

"Bobby makes a compelling case," she told The Washington Post in 2018. "I think [the investigation] should be reopened."

Rory Kennedy

Rory, the youngest of RFK Sr. and Ethel Kennedy's 11 children, has repeatedly denounced her brother's campaign.

"Bobby might share the same name as our father, but he does not share the same values, vision or judgment," Kennedy said in a statement when RFK Jr. announced his intention to run as an independent presidential candidate.

Kennedy was joined by three other siblings, Kerry Kennedy, Joseph P. Kennedy III, and Kathleen Kennedy Townsend. Rory Kennedy was born six months after her father's assassination. She is a documentary filmmaker. Her latest work is "The Synanon Fix" a TV series for Max that explores a drug rehabilitation program that turned into what some call a cult. Kennedy was nominated for an Academy Award for her work in 2005's "Street Fight" a documentary about Cory Booker's early rise through an unsuccessful Newark mayoral race.

Joseph Kennedy III

Former Congressman Joseph Kennedy III told NBC News that his uncle's campaign is "likely to divert support away from President Biden and end up increasing support for Donald Trump."

Kennedy III left Congress after failing to oust Massachusetts Sen. Ed Markey in a 2020 primary. He was viewed as a rising star in the Democratic Party and even delivered the party's official response to Trump's 2018 State of the Union. He is the most recent Kennedy to have served in Congress. Biden appointed him as United States Special Envoy for Northern Ireland in 2022.

Stephen Kennedy Smith

Stephen Kennedy Smith has said that his uncle "does not have the vision, values, or judgment of RFK Sr. "

"I have known RFK Jr. since I was a child. We attended Harvard together and my father ran Senator Robert F Kennedy's campaign for Senate in 1964 and his presidential campaign in 1968," Smith wrote on LinkedIn. "When RFK Jr decided to run he didn't call me to ask for help because he knew I would oppose his candidacy due to his misguided stands on issues, his poor judgement, and tenuous relationship with the truth."

Smith has served as a US Senate staffer, lectured at Harvard, and is a philanthropist and entrepreneur. He also wrote a book about JFK with historian Douglas Brinkley, "JFK: A Vision for America."

Bobby Shriver

Bobby Shriver, a nephew of RFK Sr., was among the family members who slammed a pro-RFK Jr. super PAC for using images of the late attorney general.

"My cousin's Super Bowl ad used our uncle's faces- and my Mother's," Shriver wrote on X. "She would be appalled by his deadly health care views. Respect for science, vaccines, & health care equity were in her DNA."

RFK Jr. apologized for the ad but promoted it on X. He later named one of the major donors to that super PAC, Nicole Shanahan, as his running mate.

Shriver, who briefly served as mayor of Santa Monica, California, cofounded (RED) which works with major brands to raise money to combat the spread of HIV/AIDS.

Jack Schlossberg

Jack Schlossberg, JFK's only grandson, has gone after his cousin for invoking the family's famous image for "personal gain" amid the presidential campaign.

"He's trading in on Camelot celebrity conspiracy theories and conflict for personal gain and fame. I've listened to him. I know him. I have no idea why anyone thinks he should be president," Schlossberg wrote on Instagram. "What I do know is his candidacy is an embarrassment. Let's not be distracted again by somebody's vanity project."

Schlossberg's comments are notable as his mother, Caroline Kennedy, cannot engage directly with the presidential campaign due to long-held interpretations of how federal law restricts political statements by US diplomats. Biden appointed Kennedy as US Ambassador to Australia.

A slew of other Kennedys have endorsed Biden.

Other family members have not been as outspoken in their criticism of RFK Jr., but they have announced that they will support Biden this November.

According to multiple reports, they are Beth Kennedy, Christopher Kennedy, Maxwell Taylor Kennedy, Vicki Strauss Kennedy, Kerry Kennedy Meltzer, Max Meltzer, Ted Kennedy Jr., Peter McKelvy, and Rebeca McKelvy.

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• Tesla reported disappointing results for the first quarter.
• But investors celebrated news of cheaper vehicles on the horizon.
• That assumes lots of people want to buy a Tesla but can't afford one.

Tesla had some bad news and some good news when it released first-quarter earnings.

The bad: It reported revenue and earnings that were below Wall Street expectations, and posted negative free cash flow.

The good news: Cheaper Teslas are on the way!

Tesla's plan to accelerate the launch of new models — including more affordable cars — and talk of a robotaxi service was enough to send the stock price higher despite the earnings miss.

The investor reaction suggests Wall Street has bought into the idea that cheaper vehicles will help solve some of Tesla's demand challenges.

EV sales growth has slowed in part because most of the options are more expensive than the average car purchase in the US, or so the theory goes.

"If you have a great product at a great price, the sales will be excellent," CEO Elon Musk said Tuesday on an earnings call.

That might ordinarily be true. But Tesla is no ordinary product. Even at a lower price, say $25,000, it's a very significant purchase — likely one of the most expensive purchases a person will make.

So let's for a second look at why a lower ticket price might not be a panacea for Tesla.

Switching from gas to electric is a big deal

Many EV buyers thus far have been early adopters, and there are many, many more car buyers who are yet to be convinced. It's part of the reason hybrids have been having a moment, as an intermediate step from gas-powered cars to fully electric vehicles.

It's possible that there are a bunch more buyers out there who would love to buy a Tesla but just can't afford one. How big is that group of buyers? It's not clear.

"These new vehicles still bring a lot of new, unanswered questions, and TSLA didn't really address, leaving us to believe much is still in flux," UBS said in a note following the earnings release.

"What are they really, and what buyer are they targeting other than 'lower cost'? Lower cost may not be enough because of lower used Tesla pricing," the note added.

For context, a quick search of Carvana reveals a whole bunch of used Teslas priced in the $25,000 to $30,000 range. Many of those listed have seen recent price drops.

Are they a good deal? It's hard to say. The resale data for used EVs is sparse, and the longevity of batteries is scattershot as technology improves.

Infrastructure challenges remain

EVs also require entirely different infrastructure from gas-powered vehicles, and anxiety over battery range and charging stations continues to be a real issue for EV owners.

The number of charging stations in the US has grown gradually over the years, but operators have struggled with maintenance and uptime issues — and some lack the amenities like snacks and bathrooms you'd find at gas stations. It's also worth noting that a full charge for a Tesla, which has nearly 7,000 US charging stations, could take up to 30 minutes.

Maybe infrastructure isn't a core concern for the archetypal early Tesla buyer: someone who might be a tech employee in California with plugins in their garage or driveway — and also at their office. There are many other Tesla buyers, of course, but as Tesla introduces lower-cost models in search of different buyers, needs will shift.

Today's buyers of a Honda Civic or Toyota Camry, two of the most prevalent cars on American roads, may not be willing to invest the time and money in perfecting their home-charging setup, which can require an electrician to install high-voltage plugs in a convenient spot. And that's, of course, only if they own their own parking space. Installation might be trickier for people living in apartment complexes, urban townhouses, or myriad other housing situations.

Musk and Tesla are politicized

As Tesla looks to lure potential new buyers with a cheaper car, it will have to contend with souring consumer sentiment toward the EV maker.

The number of US consumers who say they would consider buying a Tesla fell to 31% in February — down from 70% in November 2021 — according to research recently published by Reuters. Some Tesla owners had previously told BI that they were rethinking their allegiance to the brand due to concerns over Musk.

Tesla is also facing headwinds in China, where it's losing ground to fierce local competitors like BYD.

BYD sells one EV model for less than $10,000 in China, where Tesla's Model 3, by comparison, costs about $32,000.

Tesla's share of the Chinese auto market fell to 6.7% in the quarter ended December, compared to a 10.5% share in the first quarter last year, Bloomberg reported based on China's Passenger Car Association data.

Time will tell for Tesla

It's still not entirely clear when a new more affordable model might arrive, though Musk floated the possibility of early 2025.

Elon Musk has a history of overpromising on timelines. The Cybertruck, for example, was supposed to go into production in 2021. Deliveries to customers didn't start until late 2023.

If and when the cheaper car does arrive, it may take off. Renault has had some recent success with lower-priced EVs, for example. It could make Tesla more attractive in markets like India. Maybe the pool of buyers for a cheap Tesla will be ginormous. Betting against Elon Musk has been a losing proposition over time.

But it's worth considering what might happen if it's not an instant success.

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• Tesla's gigafactory outside Austin won't have to follow the city's environmental regulations. 
• The EV company was granted an exemption thanks to a new state law.
• Elon Musk has said the property will be an "ecological paradise," but Tesla has a history of violating the environment. 

Tesla's massive gigafactory outside Austin, Texas will no longer have to follow local environmental regulations, thanks to a recent state law.

Tesla's 2,500-acre property, which includes its 10-million-square-foot electric vehicle gigafactory, is in unincorporated land on the outskirts of Austin.

Despite not being directly in the city, most of that land was still part of Austin's "extraterritorial jurisdiction" (ETJ), which allowed the city to regulate developments outside its limits.

In February, Tesla applied for an exemption from Austin's ETJ, which the city's Planning Department approved in March.

The exemption was first reported by the Austin Business Journal this week.

The exemption was possible thanks to a new state law that went into effect in September and allows landowners to request to be removed from jurisdictions so that they can develop land with fewer regulations.

Several cities in the state have already sued to block the law, including Grand Prairie, which argued in a filing that the law will hurt the city's ability to protect the health, safety, and welfare of those who live in and around its borders.

But under the law, cities don't have much leeway to deny a landowner's request, Austin's director of planning previously said, according to the Austin Business Journal.

Tesla's ETJ exemption will enable the electric vehicle company to further develop its land without having to follow the city's environmental restrictions, which an Austin city spokesperson acknowledged could harm locals.

"Releasing properties from the ETJ impacts the City because development in the ETJ is subject to limited subdivision regulation as well as regulation of water quality and flooding issues," Shelley Parks, an Austin city spokesperson, said in a statement to Business Insider. "All affect people in both the ETJ and the City itself." 

Tesla did not respond to a request for comment from Business Insider.

When the Texas gigafactory was still under construction before its 2022 opening, Elon Musk promised it would be an "ecological paradise" with walking trails for the public along the neighboring Colorado River.

Musk's companies have had issues with environmental regulations in the past, however. In February, Tesla settled a lawsuit accusing them of mishandling hazardous waste in California. Meanwhile, the Boring Company has been accused of letting untreated wastewater drain into the Colorado River.

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• A billionaire cartel boss was arrested for his involvement in drug trafficking, reports say.
• Karim Bouyakhrichan was released on bail by a Spanish court after paying a $53,000 bond.
• He then fled, and his whereabouts remain unknown.

A billionaire drug baron was arrested in Spain on money laundering charges but was released after paying a $53,000 bond, according to reports. He then simply vanished.

During a press conference on Tuesday, Felix Bolaños, Spain's justice minister, described the development as "worrying news" but added that security forces would bring the man to justice "as soon as possible."

Karim Bouyakhrichan was one of the most important leaders of a Dutch-Moroccan cocaine cartel, according to Spanish authorities, and was arrested along with five other suspects in January.

They were accused of buying 172 properties in Spain worth more than €50 million, about $53 million, to launder the gains of drug trafficking operations, Spain's National Police said in a press release at the time.

This followed a five-year investigation that police say showed the suspects had established a criminal organization involved in large-scale drug trafficking, including the smuggling of significant amounts of cocaine.

The press release did not name Bouyakhrichan but described him as one of the leaders of the so-called Mocro Maffia — a nickname given to a network of drug gangs of Morrocan origin operating in the Netherlands, Belgium, Spain, and Morroco.

According to the BBC, the Mocro Maffia is believed to have smuggled billions of dollars worth of drugs from South America into Europe over the past decade and a half.

Politico referred to Bouyakhrichan as a billionaire who possesses bank accounts and properties around the world.

It also reported that police obtained credible evidence that he'd planned to either kidnap or kill the heir to the Dutch throne, forcing her, out of safety, to move out of student accommodation and back into the royal palace in 2022.

Bouyakhrichan was to be extradited to the Netherlands after authorities there filed an extradition order requesting he be returned to the Netherlands to stand trial for his drug trafficking empire, according to Spanish radio Cadena SER.

But shortly after his arrest, Bouyakhrichan's lawyer challenged his detention, citing a lack of evidence of criminal activity to justify imprisonment and the absence of a risk of flight, per court records seen by Business Insider.

The court rejected all of Bouyakhrichan's lawyer's grounds but ruled that preventing his risk of flight could be achieved with "less burdensome" security measures.

The judge then imposed a €50,000 bond, roughly $53,000, took away Bouyakhrichan's passport, and ordered him to report to the authorities every fifteen days.

According to the BBC, Bouyakhrichan was accidentally released amid confusion over the Dutch extradition request. It described him as one of the most wanted criminals in Europe.

Vincent Veenman, a spokesman at the Dutch public prosecutor's office in The Hague, said it was "unknown" why Bouyakhrichan had not been held in custody pending his extradition, per multiple reports.

"We are currently awaiting a decision on the extradition request," he said, adding that cooperation with the Spanish justice system was "generally good" and that "dozens of suspects are handed over every year."

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• AI is transformative, but it's hard to determine its stock winners, Howard Marks told CNBC.
• "Every bubble starts from widespread conviction," he said.
• Many are betting on an AI wave to lift a number of sectors, from semiconductors to infrastructure.

Artificial intelligence might end up changing the world, but that alone can't determine the success of its underlying assets, Howard Marks said.

"Every bubble starts from widespread conviction," the market veteran told CNBC on Tuesday. "Everybody believes A, they bid the beneficiaries of A up to the moon. It turns out, it's overdone."

When it comes to AI, Marks acknowledged the technology's transformative potential, and he himself can't say whether its beneficiaries are already under or overvalued. 

But instead, AI investing reminded him of the internet's emergence 25 years ago, which also propelled markets sky-high:

"Everybody was sure that the internet would change the world. And it did," he said, but added: "And yet the internet and E-commerce stocks that were the beneficiaries of that thinking in the TMT bubble of the late 90s — the vast majority are now worthless." 

"So to say well, I think that AI will be very important, that's the easy part," the billionaire investor said. "But knowing how it should be reflected in portfolios that's the hard part."

But forecasters are trying to meet this challenge. Just last week, Goldman Sachs outlined the sectors it thinks will win out in the long-term, from semiconductor producers to security software developers.

Meanwhile, Wall Street's other heavy hitters have voiced their own predictions. That includes the "Big Short" investor Steve Eisman, who is betting big on infrastructure to get a boost from AI's electricity demand. 

And looking at more immediate impacts, Bank of America raised its S&P 500 target last month, citing AI spending as a significant driver of growth.

But Marks has generally demonstrated cynicism towards those who make macro predictions, and warned against relying too much on Wall Street forecasts — recently calling the practice an "organized religion."

"Prices are not necessarily right, they're just the best consensus can do," he said in a speech this week.

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Hi! Costco shoppers who scooped up the store's gold bars are learning that being an amateur commodities trader is actually really hard!

In today's big story, we're looking at Tesla's earnings report and what comes next for the EV maker.

What's on deck:

• Markets: Cathie Wood's investors are jumping ship.

• Tech: Threads now has more daily US users than X.

• Business: America produces 40 million tons of plastic waste a year. It's running out of places to put it.

But first, the man with the plan.

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The big story

Tesla's turnaround plan

Bad news: Tesla's earnings report was worse than expected.

Good news: Elon Musk has a plan.

Tesla's disappointing earnings illustrated how bad a year it's having. The EV maker missed profit and revenue estimates, but those weren't the only ugly numbers.

Tesla's free cash flow was negative $2.5 billion in the quarter, a shocking 674% year-over-year drop. (The company did point out it spent $1 billion on AI infrastructure investments this quarter.)

Those figures aren't what you want to see from a public company. And even though Tesla tried to pin the blame on hybrids, such a bad earnings miss isn't usually something Wall Street overlooks.

Except… that's exactly what investors did.

Details on its robotaxis plan and news of expediting the release of an affordable model were all Wall Street needed to get back in on Tesla. Shares popped nearly 11% in premarket trading, a big win for a company down more than 40% on the year.

Tesla's ambitions around robotaxis and an affordable model tap into key trends.

Speeding up the launch of cheaper Tesla models — whenever that may be; details on a timeline were relatively scant — addresses a consumer that has shifted away from wanting big, expensive EVs.

Discussion of robotaxis, meanwhile, allows Tesla to ride the stock market's AI wave that has sent other companies' stock prices skyrocketing over the past year.

Perhaps that's why Musk spent so much of the earnings call discussing autonomy and the progress made with Tesla's Full Self-Driving software.

But having a plan is one thing. Executing it is something else entirely. Musk, for all his accomplishments, hasn't always held firm to future milestones he's targeted.

To that point, Business Insider's Linette Lopez suggested an even bigger initiative Tesla consider: Musk stepping down.

The CEO, she argues, is ultimately responsible for Tesla squandering its lead in the EV market and not better insulating itself from threats when things were going well.

Considering Musk's close ties with some of Tesla's board members, such a drastic move is a long shot. A more realistic request might be Musk pulling back on other responsibilities, but that also seems unlikely. Musk told analysts on the earnings call that Tesla is the majority of his work.

Ultimately, Musk's fate could be decided by investors. Tesla is seeking shareholder approval for Musk's $55 billion pay package, which a Delaware judge has already struck down.

If investors vote against the package at Tesla's annual meeting in June, who knows where Musk — and his AI ambitions — will end up.

3 things in markets

1. The March sell-off in stocks could be the start of something bigger. JPMorgan's Marko Kolanovic highlighted a "problematic backdrop" in equities that investors seem to be ignoring. Stubborn inflation and geopolitical concerns aren't going anywhere and "put additional pressure on investors to de-risk," Kolanovic wrote.

2. Cathie Wood's investors are heading for the exits. Outflows for Wood's ARK funds are ramping up after a three-year decline. This year alone the suite of ARK ETFs has net outflows of $2.2 billion, triple what it endured last year.

3. Stocks for a strong economy. Goldman Sachs highlighted 30 names that they think will outperform the market because they're investing heavily in future growth opportunities like artificial intelligence. Meta, Intel, and Micron Technology were among the stocks the bank flagged.

3 things in tech

1. Microsoft is blocking employee access to Perplexity AI. Perplexity AI is one of the largest customers of Microsoft's Azure OpenAI service. Other AI tools, like Google's Gemini chatbot, are also blocked on Microsoft's employee devices.

2. Threads has overtaken X in one key metric. New data shows Meta's Threads is consistently surpassing Elon Musk's X in daily users in the United States. While X still has more monthly users, Threads could be on its way to becoming bigger than its competitor.

3. Scoop: Navan's IPO. The a16z-backed travel and expense platform, which was valued at $9.2 billion back in October 2022, is targeting an April 2025 public listing, a person with direct knowledge of the matter told BI.

3 things in business

1. America is drowning in plastic. In 2018, China stopped taking the United States' plastic imports. The US is now scrambling to find alternatives for the 40 million tons of plastic it produces each year.

2. How Amazon won over skeptical advertisers. Since launching three months ago, Prime Video's ads have made a positive impression on advertisers, luring them in with generous price incentives and sponsorships.

3. The Senate passed a bill that could ban TikTok. Joe Biden has signaled that he'll sign the legislation, which would effectively ban TikTok from the US app store. The final vote was 79 senators in favor, and just 18 opposed.

In other news

• The FTC is fighting for your right to job-hop.

• These 18 senators voted against Ukraine and Israel aid.

• The American Kennel Club's pedophile problem.

• Patriots owner Robert Kraft yanks support for Columbia as Israel-Gaza protests intensify.

• Trump may be held in contempt Tuesday after hush-money DA cites at least 10 gag-order violations.

• Apple sinks to 3rd place in China as iPhone sales slide.

• A hospital in Australia is begging snakebite victims to stop bringing the snakes in with them.

• I went on a date with an AI chatbot. He fell head over heels in love with me, but I got the ick.

What's happening today

• Today's earnings: Boeing, Meta, IBM, and other companies are reporting.

• The US Supreme Court will hear the Idaho abortion ban case.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London.

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• The S&P 500 is at risk of plunging 44% to around a four-year low, Paul Dietrich said.
• The top strategist explained that selling stocks well before they crash can yield outsized returns.
• Dietrich predicted a mild US recession this year based on multiple warning signs and threats.

The stock market may be headed for a 44% crash — and getting out early could pay off, Paul Dietrich said.

B. Riley Wealth Management's chief investment strategist moved his clients out of stocks and into bonds in 2000, and from stocks to cash, bonds, and gold in 2007, he recalled in his April market commentary.

Dietrich's clients missed out on massive run-ups in stocks over the next year or so. But they also escaped staggering blows from the ensuing collapses of the dot-com and housing bubbles.

They wound up netting 7% before fees during the 2000-2002 recession, when the S&P crashed by 49% and the Nasdaq plunged by 78%. They lost about 6% gross of fees during the 2008-2009 recession, but that performance trounced the S&P's 57% decline during the same period.

"Despite the fun and excitement of participation in the current Mardi Gras-like stock market bubble completely untethered to any stock fundamentals, suppose an investor could miss most of a 49% or 57% decline in the S&P 500 index and then get back into the stock market when the leading economic indicators and long-term moving averages indicate the recession is over," Dietrich said.

He emphasized that the "wildly overvalued" S&P would have to drop by 8% to return to its 200-day moving average, and the index has retreated by an average of 36% in past recessions.

Thus, Dietrich said the benchmark could suffer a 44% rout to about 2,800 points — a level it last touched at the height of the pandemic in 2020.

Dietrich also laid out why he still expects a mild recession this year. He pointed to heady stock valuations, charts flashing red, a historic jump in the so-called Buffett Indicator, the risk that interest rates stay higher for longer, and gold prices hitting record highs as signs that the market and economy are headed for trouble.

The Wall Street veteran added that the recession has been delayed by vast amounts of government spending, consumers racking up debt to make purchases, and a historically tight labor market that's showing signs of cracking.

Dietrich's latest warnings warrant skepticism, as the stock market and economy have defied his and other doomsayers' bleak forecasts for years now.

Moreover, famed investors like Warren Buffett have warned against trying to time the market as it's virtually impossible, and steadily investing or "dollar-cost averaging" into an index fund is a far superior strategy.

Yet several of Wall Street's biggest players, including JPMorgan CEO Jamie Dimon, Goldman Sachs CEO David Solomon, and Citigroup CEO Jane Fraser, have all cautioned that markets aren't pricing in the risks posed by threats like inflation, recession, and geopolitical strife.

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• Sen. Tommy Tuberville of Alabama has long been opposed to Ukraine aid.
• He delivered a nearly 10-minute floor speech railing against it before the bill passed on Tuesday.
• But during the actual vote, the Alabama senator was nowhere to be found.

Ahead of a final Senate vote to send Ukraine aid to President Joe Biden's desk, Sen. Tommy Tuberville made one last stand against it.

The Alabama Republican delivered a more than nine minute floor speech denouncing further aid on Tuesday, describing Ukraine as a "black hole with no accountability" while accusing House Republican leaders of having "sold out Americans" by allowing a vote on the bill in the first place.

"The war in Ukraine is a stalemate. It has been for a while," said Tuberville. "We should be working with Ukraine and Russia to negotiate an end to this madness."

But when the Senate actually held a voted on the bill shortly after 9 pm on Tuesday, Tuberville was one of just three senators who did not cast votes.

It's not clear why Tuberville missed the vote, and his Senate office did not immediately respond to Business Insider's request for comment. He was present earlier on Tuesday to cast procedural votes against the bill.

Republican Sens. Rand Paul of Kentucky and Tim Scott of South Carolina also missed the final vote. Paul has long been an opponent of Ukraine aid, while Scott said in a statement on Tuesday that he supports the bill.

Sen. Katie Britt, Tuberville's Alabama colleague, voted for the bill on Tuesday after voting against a previous version of the aid package in February.

The more than $61 billion in Ukraine aid was wrapped up in a larger $95 billion package that included more than $14 billion for Israel, $9 billion in humanitarian aid, aid for Taiwan, and a bill to force a sale of TikTok. Tuberville said he supported the Israel aid.

The Alabama senator has long been an opponent of Ukraine aid. In May 2022, he was one of just 11 Republican senators to vote against a $40 billion aid package for the country.

He has incorrectly described Russia as a "communist" country, despite the country's history of capitalism since the collapse of the Soviet Union in 1991.

"He can't feed his people," Tuberville said in February 2022, referring to Russian President Vladimir Putin. "It's a communist country, so he can't feed his people, so they need more farmland."

He has also dismissed the idea of even loaning Ukraine the money, an idea championed by former President Donald Trump.

"I don't see Ukraine having anything unless they're gonna give us part of their country, and we don't want that," Tuberville told BI last month.

On Tuesday, 15 of Tuberville's Republican colleagues voted against the foreign aid bill, while three members of the Democratic caucus did the same.

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