Is he a god? A magician? or is he Superman? No, he is a 29-year-old MIT graduate who is now worth about $10 billion. Many may have heard of this Hong Kong-based CEO in 2020, when he donated a whopping $5.2 million to Joe Biden’s campaign, making him the second-biggest donor.
Never heard of him? Well, have a seat as we tell you about tech giant, Sam Bankman-Fried.
Started from the bottom? Or Wall Street?
It was the year 2013 and there was Sam, a 21-year old graduate, fresh out of the Massachusetts Institute of Technology. He was skilled in math, he loved to solve problems and give back to society. Sam was interested in earning to give and wanted to have a positive impact on the world around him.
It was not long after that he was introduced to Jane Street Capital, a quantitative trading firm located on Wall Street where he started an internship. A couple of years later, Sam had earned enough money that he started to donate thousands of dollars to organizations, which funded the employment of people to work on projects that aided social welfare.
Effective Altruism and Charitable Actions
Many people established organizations solely to make profits and create better lives for themselves (which is very valid!), but not this guy. In the year 2017, Sam, together with others interested in Effective Altruism, founded a cryptocurrency trading firm called Alameda Research which has grown to become a giant in the cryptocurrency market.
In 2019, Bankman-Fried also started a global cryptocurrency exchange known as FTX, which is one of the major players in cryptocurrency exchange, trading billions daily. Sam, through the FTX Foundation, donates 1% of net fees from FTX to charitable causes.
Alameda, Alameda, Alameda
“We don’t call ourselves a market maker, we are a quantitative cryptocurrency trading firm. We don’t have investors, we don’t have customers, we are a proprietary trading firm. We trade with our money and we are just looking for quantitative trading opportunities.” – Sam Bankman-Fried on Alameda in his interview with Venture Coinist.
When Wall Street and Silicon Valley come together, the result is Alameda Research. Alameda Research is a quantitative trading firm run by Sam Bankman-Fried and Gary Wang. Quantitative trading is the use of mathematical operations to identify trading opportunities in the market.
For many, their first encounter with Alameda Research will be on BitMEX where the company currently holds 2 positions in the top 10 on the BitMEX Leaderboard and where the quant-firm also has over 7000BTC in profit. Through this organization, Sam and his team manage over $100 million in digital assets and trade about $600 million – $1.5 billion daily.
The team at Alameda Research uses technology, math, and trading information to make major trading decisions in the market. Of course, it is more complicated than that but, with Sam’s math skills and Jane Street experience, it’s a piece of cake.
Alameda births FTX
In 2019, Bankman-Fried, through Alameda, diversified. The result of this diversification was an over-the-counter trading desk and the birth of Alameda’s exchange called – FTX. About eight months before the birth of FTX, Sam stated that they (the team at Alameda) had written white papers to several exchanges proposing how they could redesign their products.
In an interview with Venture Coinist, Sam stated “We had spent a lot of time working with APIs and trading venues, that we knew how they worked and where the pain points were… we were getting pretty frustrated, we had lost millions of dollars based on faulty exchange platforms. There were a lot of liquidity failures, specifically Bitcoin margin contract liquidity failures and for us, that was the tipping point.“
The team started building FTX in 2018, shortly after the mass liquidity failures. The project started in November 2018, and the beta version was up in January 2019. In April, the product – FTX was launched. FTX is currently the fifth-largest derivatives exchange (as of April 2021) and it has a valuation of about $3.5 billion. The company has recently launched a highly scalable, decentralised exchange called Serum.
SBF: The Future
Bankman-Fried was recently featured in the finance category of the Forbes 30 under 30 list for 2021. Looking into the future, he has plans to scale 1 billion people to use his platforms: FTX and Serum. Serum, which is built on the Solana blockchain, is said to be capable of processing 50-65,000 transactions per second when compared to Ethereum which does about 15 tips.
Speaking about Sam Bankman Fried, Kain Warwick stated : “that kind of laser focus, combined with access to large amounts of capital, was a bit of a shock to the nascent DeFi ecosystem when SBF first popped up earlier in the year. But I think many projects and DeFi players learned a lot from how Alameda, FTX, and SBF himself came in and went after every last cent.”
Maybe he is not a god or a magician or even Superman, but Sam Bankman-Fried is a genius, and he is one worth watching out for.
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