FTX cofounder Sam Bankman-Fried built a $22.5 billion fortune at age 29 by profiting off the cryptocurrency frenzy – but he’s not a true believer. He just wants his wealth to survive long enough to give it all away Forbes400
t’s a hazy late-summer evening when Sam Bankman-Fried drifts into Electric Lemon, a “clean, conscious” eatery on the 24th floor of the five-star Equinox Hotel in Manhattan’s Hudson Yards complex. The 29-year-old cryptocurrency billionaire has jetted in from Hong Kong in part to cohost this private party but nonetheless tries to slink to the corner of the room unnoticed.
Steve Jobs obsessed over his sleek and simple products. Elon Musk claims he’s in business to save humanity. Not Bankman-Fried, whose philosophy of “earning to give” drove him into the crypto gold rush, first as a trader, then as the creator of an exchange, simply because he knew he could get rich. Asked if he would abandon crypto if he thought he could pile up more money doing something else—say, trading orange juice futures—he doesn’t even pause: “I would, yeah.
He read deeply in utilitarian philosophy, finding himself especially attracted to effective altruism, a Silicon Valley–esque spin on philanthropy championed by Princeton philosopher Peter Singer and favored by folks like Facebook cofounder Dustin Moskovitz. The basic idea: Use evidence and reason to do the absolute most good possible. Typically, people give to trendy causes or those that have affected them personally.
In late 2017 he quit his job and launched Alameda Research, a quantitative trading firm, with about $1 million from savings and from friends and family. He set up shop in a Berkeley, California, Airbnb with a handful of recent college grads and began working the arbitrage trade, hard. Sometimes his entire staff would have to stop work to swarm foreign-exchange websites because they couldn’t convert Japanese yen to dollars fast enough.
At first it was slow going. A dozen employees toiled from standing desks in a Hong Kong WeWork, trying to lure traders to their new exchange. He soon found a niche catering to more sophisticated investors looking to trade derivatives—things like bitcoin options or Ethereum futures. Many derivatives traders have little to no ideological conviction about crypto. Like Bankman-Fried, they simply want to make money.
Bankman-Fried’s nimbleness and speed of execution has attracted plenty of investor attention. In January 2020, crypto-focused venture capital firms including Pantera Capital and Exnetwork Capital pumped $40 million into the business at a $1.2 billion valuation, according to PitchBook. By this July, seemingly every blue-chip VC in the world wanted a piece of FTX. He was able to raise
At the moment, essentially none of his profits are going toward philanthropy. Including a pledge of 1% of its net fees, FTX and its employees have earmarked $13 million for charity so far. But mostly he’s plowing billions back into his businesses, including spending $2.3 billion in July to buy back Binance’s 15% stake in FTX—doubling down on his bet that if he keeps building his wealth, he can make a bigger charitable impact later.
“Those concerns are real, but sometimes a little overblown. If you look at carbon produced per dollar of economic activity, crypto is not a huge outlier,” Bankman-Fried claims. “It’s probably a factor of two or three worse than the average company but not a factor of 20 or 30.” He notes that FTX buys carbon credits to offset its consumption and is investing $1 million into carbon capture and storage initiatives.
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