Sam Bankman Fried
Sam Bankman Fried, popularly known as SBF, is an American serial entrepreneur. He is known as the founder and former CEO of FTX, a cryptocurrency derivatives exchange, and Alameda Research, a cryptocurrency liquidity provider.
On November 11, 2022, Sam stepped down as the CEO of FTX after filing for Chapter 11 Bankruptcy in the US for FTX, FTX's U.S., and Alameda Research. It was discovered that FTX owed $9 billion in liabilities while holding under $1 billion in assets before its bankruptcy filing.
Early life and Education
Sam Bankman-Fried was born on March 6, 1992, in Stanford, California, U.S.A to an upper-class Jewish family. He is the son of Barbara Fried & Joseph Bankman, both Stanford law professors. Sam and his brother Gabe Bankman-Fried, who was a former Wall Street trader and the executive director of the non-profit Guarding Against Pandemics, were raised by their parents with utilitarian ideals, which set the foundation for Bankman-Fried’s later philanthropy.
He went to Crystal Springs Uplands School in Hillsborough, California where he graduated in 2010. Bankman-Fried attended Canada/USA Mathcamp as a high school student, a summer program for mathematically gifted Students.
In 2014, Sam graduated with a bachelor's degree in physics and a minor in mathematics from the Massachusetts Institute of Technology (MIT). Sam joined Epsilon Theta, a STEAM-focused coed fraternity at MIT, where members spent their time playing board and computer games.
During his third year as a physics major at the Massachusetts Institute of Technology, Bankman-Fried was exposed to effective altruism during a talk on the ethics of career choice by William MacAskill. Obsessed with the idea of doing good, Bankman-Fried decided to focus on making as much money as possible and then giving it all away.
While still at college, Bankman-Fried interned at Jane Street Capital, a Wall Street trading firm that trades international ETFs. After college, he returned full-time, donating more than half of his earnings to charity.
After college, Sam started working for Jane Street Capital in New York full-time. He gained diverse experience at the firm, including trading a variety of crypto ETFs, futures, and equities. He also created the company's OTC trading system. He worked at Jane Street for three years before stumbling across cryptocurrency in late 2017.
He left Jane Street Capital in September 2017 and briefly worked as the director of development at the Center for Effective Altruism Berkeley, CA, while having the idea of starting his own cryptocurrency trading firm. He knew very little about cryptocurrency at the time, but he saw its potential.
Alameda Research (2017)
Sam Bankman-Fried launched Alameda Research along with his college friend Gary Wang in 2017. He named it after Alameda County in California, the home county of Sam. While operating Alameda, Bankman-Fried decided to move to Hong Kong in 2018.
Alameda initially concentrated on profiting from the Japanese Bitcoin premium through a strategy known as arbitrage trading. This strategy took the advantage of price differences between identical assets in different markets by purchasing at one exchange and selling at another. For two years, Alameda did well, making up to $1 million in profit per day. They made around $20 million in the first few months, and the company was profitable before it collapsed in 2022.
In April 2019, Sam founded FTX, a cryptocurrency derivatives exchange. Bankman-Fried and Wang were inspired to launch their own cryptocurrency exchange platform with more trading options and enhanced security. In April 2019, FTX registered in Antigua and Barbuda before launching in Hong Kong the following month. FTX is an abbreviation for "Fu-Tures eXchange." FTX was a pioneer in allowing traders to hold all of their margins in one wallet as collateral, rather than having to manage multiple waits for different assets. FTX has also consistently expanded its product offerings, which included crypto derivatives, options, tokenized stocks, prediction markets, leveraged tokens, OTC, and pre-IPO tokenized stocks.
With the beginning of COVID-19, Bankman-Fried relocated the company's headquarters from Hong Kong to the Bahamas, where it would be easier to run the business. A year after its launch, the company was worth more than $1 billion, and $32 billion three years later. The exchange had over one million users as of early 2022.
Bankman-Fried has been known as a philanthropist from early in his career. It is reported that he donated 50 percent of his salary to pro-animal welfare organizations while he was a trader at Jane Street. He was 2nd biggest donor to Joe Biden’s campaign, donating over $40 million to Democrats for the 2022 midterms elections.
On November 2nd, 2022, CoinDesk published a report of based on a leaked Alameda Research balance sheet which showed Alameda claiming to have $14.6 billion of assets as of June 30, of which most were reviewed to be majorly FTT tokens. The cryptocurrency lost about 10% in its price on November 6th, 2022 after Binance CEO Changpeng Zhao announced it would liquidate its FTT holdings worth over $580 million. This forced FTX to stop customer withdrawals on November 8. A later article by the Wall Street Journal, citing people familiar with the matter, claimed FTX used billions of dollars worth of customer funds on risky bets to help run Alameda. On November 11, 2022, FTX filed for Chapter 11 Bankruptcy in the US, leading to the resignation of Sam Bankman-Fried, who was replaced by John J. Ray III.
US SEC Probe
As of November 16, 2022, Sam Bankman-Fried was hit with a class-action lawsuit filed by investors alleging he and other high-profile celebrities violated Florida law and made consumers suffer more than $11 billion in damages.
The US SEC launched the investigation into Bankman-Fried. He is being investigated for any possible violations of securities laws. It was noted that the SEC is looking into Bankman-Fried’s recent actions that contributed to the liquidity problem at FTX.com.
Sam Bankman Fried