Sam Bankman-Fred, founder and CEO of cryptocurrency exchange FTX. According to foreign media estimates, Fred is currently worth about $21 billion, with most of his wealth tied to his stake in FTX. In its latest funding round in January, the company was valued at $32 billion.
Sam Bankman-Fried (SBF for short) is always wearing a messy shaggy hair, like the kind of otaku who stays up all night and sleeps until noon and doesn’t get up at noon. Fat physique, always dressed in T-shirt and shorts, and snoozing on the beanbag between work, further deepen this stereotype.
Not that no one tried to fix his image, before his first TV appearance, his Alameda and FTX colleague Andy Cloghan earnestly urged him to get a haircut and dress up like a normal business elite. But SBF refused: “Actually for me, cutting my hair is a negative EV – I need people to think I look crazy.” The
so-called EV is Expected Value, which refers to an investment in the future The expected average value at a particular point in time. SBF will quantify the pros and cons before making any kind of business decision. He assigns a number to each possible outcome: a good outcome should have a positive EV, while a bad outcome should have a negative EV value.
This decision logic sounds very Wall Street and very utilitarian at the same time. In this regard, it may have to start with SBF’s childhood.
SBF’s surname Bankman-Fred comes from the combination of his parents’ surnames, which to some extent reflects SBF’s family philosophy. His parents, both professors at Stanford Law School, have done a lot of research on utilitarianism. Unlike other ethical theories, utilitarianism does not consider the motives and means of one’s actions, but only one goal, the so-called “greatest happiness”.
Utilitarianism holds that people should perform actions that “achieve maximum happiness”, and that the calculation of maximum happiness must rely on the sum of the pain and pleasure feelings of each individual involved in the action, each of which is considered to have equal weight , and happiness and pain can be converted, and pain is equivalent to “negative happiness”. A person’s actions, regardless of their motives, are good, and vice versa.
”We would discuss these things at home,” said his father, Joseph Bankman, and within the utilitarian ethical framework, SBF grew up with the belief that “the greatest happiness for the greatest number of people”. When he grew up and was an undergraduate student at MIT, SBF met William McAskill, a disciple of contemporary ethics guru Peter Singer and one of the founders of the effective altruism movement. William MacAskill), who was quickly drawn to the idea.
McAskill introduced SBF to a model of effective altruism practice known as “making money for good.” Simply put, this model is to use any feasible method to make as much money as possible, and then find the most beneficial way to donate it back to society as much as possible.
SBF took it so seriously that after earning a degree in physics, he jumped into Wall Street right away, working at Jane Street, a high-frequency trading firm, using his strengths in mathematics and quantitative analysis, and starting to put his half salaries are donated to charities.
In 2017, SBF saw the savage growth of the cryptocurrency trading market, and he immediately realized that his outlet had arrived. “Everyone’s talking about cryptocurrencies, and it’s actually an area that you can get into as an individual,” he said, adding that both Wall Street and the government are still trying to keep up with the market, and companies in the cryptosphere are making changes almost every day. In the launch of the new currency, both government regulation and the senior financial transaction rules in the currency circle are still in the primitive stage. For a trader like SBF who is extremely sensitive to numbers, understands the logic of the currency circle, and has practical financial theory and experience, it is Best entry opportunity.
So he left Jane Street Capital and founded Alameda Research, a cryptocurrency trading company, and made his first pot of gold by reselling Bitcoin between Japan and the United States for cross-border arbitrage. He rented an office in Berkeley, where more than 20 traders worked day and night, and he almost lived in the office himself: There was a beanbag next to his desk, where he spent most of his time. Sleep time; when he needs to clean up his personal hygiene, he’ll go back to his apartment, take a shower, change into a pair of khaki shorts, and jog back to the office.
Their company actually turned an office into a bedroom with comfortable beds for employees to rest. “But he never sleeps, he likes a beanbag,” a colleague said. He almost sees sleep as a luxury, he rarely takes a shower, he doesn’t fall in love, and in fact hardly spends any extra time on these “leisure” things. “Every minute you sleep is wasting thousands of dollars and representing lives you could have saved,” explains co-worker and childhood friend Matt Nass.
Such dedicated work has quickly made SBF famous in the currency circle, and Alameda has quickly become a popular digital financial asset platform for cryptocurrency traders. Two years later, he founded FTX in Hong Kong. By this time, his fame was very useful, and his fans flocked to it, which quickly attracted a wave of popularity for his new platform.
FTX aimed at the gap that had not been filled in the currency circle at that time. Before SBF entered the market, the currency circle was almost a playground for technical experts, and their understanding of finance was limited. Although SBF can’t write a single line of code, his Wall Street background is a dimensionality reduction blow here.
In 2019, when everyone in the currency circle was troubled by contract crossing, executives of various exchanges mocked each other on social platforms and the media, and FTX was born to solve this problem. Cross-position means that in futures contract trading, users not only lose all the margin, but also owe the trading platform money. FTX has created a three-level liquidation model, which can avoid the loss of cross-position to the greatest extent.
In addition, FTX introduces stable currency contracts and leveraged token mechanisms, and adopts general margin settlement, which allows the currency circle to return from a gambler’s game to the scope of rational financial investment, which greatly reduces investors’ losses and risk of liquidation. Coupled with extremely low transaction fees, FTX quickly became one of the largest platforms for cryptocurrency derivatives trading, while Alameda has successfully evolved into a more upstream “think tank” role in the currency circle ecology, with its business lines respectively trading business. (quantitative trading + market maker), OTC business, research and analysis business, investment business.
SBF became the richest man in the currency circle. He is estimated to own over 50% of FTX, 70% of FTX USA (starting 2020), and almost all of Alameda. Now based in the Bahamas, FTX raised $400 million in January at a valuation of $32 billion, while FTX US was valued at about $8 billion.
He is now the richest man in the effective altruism movement, and the SBF is almost a living social experiment. He is passionately concerned about the future of mankind and the world, even those apocalyptic crises that sound too sci-fi, such as artificial intelligence riots, global plague epidemics, extreme abnormal climates, and so on. “I want to prepare as much as possible for the future of humanity,” he said.
SBF claims that he will only keep 1% of his annual income, or at least $100,000, to maintain a comfortable life, while the rest of his wealth is used for charity. SBF revealed that he donated a total of more than 50 million US dollars last year to help India’s epidemic and anti-global warming and other public welfare issues, and his donation plan for this year has also been completed. Anyway, it must be hundreds of millions of US dollars, at most It may also reach the $1 billion level.
The center of the decentralized world
Now the home of the Miami Heat has been named the FTX Arena, and Tom Brady, the greatest American football quarterback in history, and his supermodel wife Gisele Bundchen have performed in FTX commercials. At the MLB World Series, you can see a billboard for FTX that says FTX is MLB’s “official cryptocurrency exchange.” SBF went to the Super Bowl, of course he did, and he was also a high profile figure in that star-studded scene. But back at the office, when asked by reporters about his trip to the Super Bowl, he would scratch his arm like a normal, boring college student: “I don’t know if I should say ‘it’s interesting,’ I’m not that The type to enjoy a party.”
In 2017, Fred saw the savage growth of the cryptocurrency trading market, and he immediately realized that his outlet had arrived.
He still drives a Toyota Corolla, and he shares an apartment with a dozen roommates, several of whom have become billionaires. “There’s not much happiness that money can buy, and it’s a trick that quickly wears off,” SBF says, “so I don’t need a yacht.”
As a utilitarian, SBF believes that money measures caring for others. He believes that there are many ways to use money to do good things in this world. The simple one is donating money to charity, which he has been doing all the time; and the more complex and important one is to choose a method that can achieve “greater happiness” at a higher cost. .
For example, during the winter season that the currency circle is going through, many cryptocurrency exchanges have closed down one after another. Due to the lack of supervision in the currency circle as a whole, neither the executives of the trading platform nor the investors themselves may have sufficient financial knowledge. Knowledge, there are major loopholes and regulatory blind spots on the balance sheets of many exchanges, and only a snowflake will cause the collapse of the whole.
But SBF believes that he is using his own methods to save the entire cryptocurrency financial system from a crisis of credit and trust, in a way that will cause the least damage to the majority of investors. Just like in 1907, before the establishment of the Federal Reserve, there was a run on Wall Street and large-scale bank failures, and the wealthy Morgan took a group of bankers to buy or provide loans to companies that were on the verge of bankruptcy, by playing the role of “central bank” role in saving America.
And SBF has done the same. Last month, he acquired Canadian cryptocurrency trading platform Bitvo, and brokerage services firm Embed Financial Technologies. With the collapse of stablecoins and the collapse of crypto lending firms Celsius Network and Three Arrows Capital, SBF has loaned another $485 million to troubled cryptocurrency broker Voyager Digital and bailout digital asset loans with a $400 million revolving credit facility With BlockFi, the loan comes with the option to acquire the company outright.
Today he and his company have “billions of dollars” on hand to support struggling companies, SBF said. He believes that this crisis is about to pass, and this winter in the currency circle will not be as tragic as in 2018. The currency circle will not go bankrupt and everything will be fine. According to his own disclosure, the Alameda company he controls may lose at least $70 million in credit that has been issued in this crisis, but FTX has remained profitable for the past 10 quarters, which is the greatest confidence for him to intervene in the currency crisis. Meanwhile, FTX’s biggest rival, Coinbase, lost $432 million in the first quarter of 2022, and its shares have fallen nearly 90% from their all-time highs.
Some people call SBF “the central mother of the currency circle”, thinking that he plays the savior of the industry; some call him a vampire, thinking that he is using the industry crisis to expand his business empire, and some even claim that SBF is in crisis one of the manufacturers.
The core idea of cryptocurrencies is decentralization, but now it looks like there will be a center.
In any case, SBF began to maintain a stable relationship with Washington like every major financial tycoon. From his base in the Bahamas, he travels regularly to the Capitol to meet with regulators and to appear in congressional hearings. His lobbying direction is to bring cryptocurrency trading under the supervision of the Commodity Futures Trading Commission, not the SEC, and if he succeeds, cryptocurrency trading can still receive a more relaxed regulatory environment than trading in traditional financial products.
If he succeeds, he could become one of the most influential figures in a new era of technological experimentation that proponents call web3, writing for a series of venture capital products that are increasingly reshaping the internet, finance and even art rulebook. In the future of the metaverse era, FTX can play the role of a channel. As long as you click on it, real currency can be exchanged for Bitcoin or NFT in real time, and the door to a new world will be opened.