Sam Bankman-Fried

Sam Bankman-Fried is the founder and CEO of Alameda Research and FTX. He is one of the richest people in Hong Kong and the richest person in the world under 30 who achieved his success on his own, without the help of «rich parents». However, Fried was one of the richest and most influential people in the cryptocurrency world until his empire collapsed in November 2022. And on November 3, 2023, he was found guilty of a multi-billion dollar fraud with FTX.

The current billionaire is the son of law professors from Stanford (USA). Sam graduated from a private school in San Francisco, and in 2014 received a bachelor’s degree in physics from the Massachusetts Institute of Technology.

After graduation, Benkman-Fried got a job at Jane Street Capital, a financial company, where he received a six-figure salary, part of which he donated to charity.

Cryptocurrencies attracted the future billionaire’s attention in 2017, when bitcoin first grew strongly, rising from $ 2,500 to almost $ 20,000 per token in six months. Sam realized that he could buy BTC in the US and sell it in Japan for 30% more.

At the end of the same year, he quit his job, took the million dollars he had saved, and borrowed another million from friends and family. With these investments, he founded his own trading company, Alameda Research, which uses mathematical calculations to develop business strategies.

Together with other recent graduates from his institute, Sam rented an apartment in Berkeley, California, and started working in the field of arbitrage. In January 2018, the small startup was transacting about $ 25 million worth of bitcoin daily. However, difficulties soon began to arise because currency exchange sites could not quickly convert Japanese yen into dollars.

Launching FTX

In 2019, Sam took a portion of Alameda Research’s profits and raised $ 8 million with the help of several venture capital firms to start his own cryptocurrency exchange, FTX.

In its early days, FTX operated out of a Hong Kong coworking space called WeWork with about 10 other employees. The new exchange grew so fast that it soon earned $ 18 million and sold a stake to Binance for about $ 70 million.

• However, in July 2021, Benckman-Fried spent $ 2.3 billion to buy out Binance’s 15% stake in FTX.
• Last September, Sam moved the company’s headquarters to the Bahamas. Thanks to low overhead, the company’s profit margin remains high at around 50%.
• Last year, FTX generated almost risk-free revenue of $ 750 million and a profit of $ 350 million. At the same time, Alameda Research earned $ 1 billion in 2020.

Thanks to the bull rally and the cryptocurrency boom, FTX’s trading volume exceeded $ 400 billion in April 2021, which is 25 times more than in the same period of the previous year. With this figure, the platform became one of the leading digital asset exchanges in the world at that time.

Unlike cryptocurrency trading platforms that are geared towards beginners (such as Coinbase), FTX is known for its sophisticated derivatives, similar to those sold by investment banks:

• futures;
• options;
• volatility index;
• tokens with internal leverage, etc.

For active traders with good funding, who, according to Bankman-Fried, operate on the exchange, such products allow them to short the market and make money on large declines.

The exchange also offers so-called tokenized shares, digital tokens that track the share prices of real companies such as Tesla and GameStop so that people have the technical ability to trade shares around the clock.

Another exotic product of FTX is trading in IPO contracts (first public sale of shares), which allow traders outside the United States to bet on the valuations of companies entering the market.

Capital

Sam Bankman-Fried is already being called the «new Mark Zuckerberg». With a fortune of $ 22.5 billion last year, he became the richest billionaire in the world under the age of 30. Only the founder of Facebook managed to earn such a fortune at a young age.

At the age of 29, Sam Bankman-Fried was ranked 32nd in the list of the world’s richest people by Forbes magazine. He is also proud to be the richest man in the world of cryptocurrencies, having overtaken Coinbase CEO Brian Armstrong ($ 10.2 billion), the famous Winklevoss twins, the founders of the Gemini crypto exchange ($ 4.3 billion each), and Ethereum co-founder Vitalik Buterin, who is no longer in this ranking.

Bankman-Fried is a vegan. He takes an altruistic approach, inspired by philosopher Peter Singer of Princeton University and Dustin Moskovitz, co-founder of Facebook.

Despite his wealth and achievements, Benkman-Fried claimed that he became a billionaire «almost by accident.»

«I got into cryptocurrencies without having any idea what they were. It seemed to me that there were a lot of transactions to be made», Benkman-Fried admitted in an interview with Forbes.

Sam is guided by the idea of «earning to give back,» and his goal is to earn as much money as possible in order to give it away in the future, like Robin Hood, to those in need. (However, he has not yet specified how and to whom exactly).

So far, Benkman-Fried has donated $ 25 million to charity, 0.1% of his fortune. He has donated to voter registration, global poverty alleviation, and artificial intelligence security.

Bankman-Fried spends $ 900 million received from investors on business expansion tools: some are intended to increase the user base, others to open access to licenses in key jurisdictions. In August 2021, FTX took over the New York-based LedgerX exchange, which is authorized by the US Commodity Futures Trading Commission to operate with cryptocurrency derivatives. Experts believe that FTX could overtake Binance, Coinbase, and Kraken to become the first major crypto exchange to offer derivatives in America.

Bankman-Fried is investing hundreds of millions in marketing. In March 2021, he paid $ 135 million to rename the Miami Heat’s stadium FTX Arena, and in June signed a $ 210 million advertising contract with the TSM esports league.

TSM FTX team

In August, the businessman agreed to pay $ 17.5 million to rename the University of California, Berkeley’s stadium FTX Field. In addition, Bankman-Fried has launched a $ 30 million advertising campaign to promote the FTX brand through celebrities such as Shark Tank’s O’Leary, NFL legend Tom Brady, and NBA superstar Steph Curry. All three have a stake in FTX.

The entrepreneur does not want to limit himself to cryptocurrencies. In 2020, he decided to bring FTX to the prediction markets. They allow you to bet on the outcome of real events, such as the Super Bowl and presidential elections. Benkman-Fried expects that one day customers will be able to buy and sell anything on FTX, from Ethereum options to Microsoft shares and mutual funds.

«The world is a huge place, and we shouldn’t think that cryptocurrencies will remain the most profitable market forever», emphasized Sam Bankman-Fried.