Sam Bankman-Fried is a strange bird with an incredible career; the founder of the FTX platform is indeed a proponent of effective altruism.
As with all speculative activities, those who choose to invest in cryptocurrencies often do so hoping to hit the jackpot. The majority of them run the risk of seeing their hopes dashed at the first “dip”, but some still manage to pull out of the game; this is the case of an American who made his fortune this way, and who now intends to redistribute 99% of his money.
The story was first documented by Bloomberg before being relayed by Interesting engineering. We learn that the person concerned, Sam Bankman-Fried, has always gravitated towards finance. He cut his teeth on Wall Street; it was there that he quickly identified a way to make lots and lots of money.
In 2017, the cryptocurrency ecosystem was much less well defined than it is today. In this nascent crypto jungle, he noticed that the prices of these virtual tokens could be very different depending on the fiat currency involved in the transaction. Bloomberg explains that at the time, there could be up to 10% difference between the price of a Bitcoin in Japanese yen or in US dollars.
A detail apparently too good to be true; it immediately jumped out at this data-comparison analyst. Neither one nor two, he hastened to create a company specifically dedicated to exploiting this flaw in the system. This difference eventually faded over time. But the responsiveness of Banker-Fried enabled it to pocket its first 20 million dollars in order to launch the machine.
A success built on cryptocurrencies
This nest egg then allowed him to found the FTX cryptocurrency exchange platform with his friends. She immediately met with blazing success; a year later, the equivalent of a billion dollars was already passing through the platform every day.
Currently, Bloomberg claims it is the third-largest such platform in the world, with more than $2 trillion in exchange under its belt. Inevitably, this success proved to be very profitable for Bankman-Fried. It would weigh today 24 billion dollars at just thirty years old.
Sam Bankman-Fried has more money than Ray Dalio and will probably pass Jim Simons.
He started FTX less than three years ago. pic.twitter.com/RMXVQqMfkh
– Michael Batnick (@michaelbatnick) March 29, 2022
But contrary to what one might think with this kind of American success story, he did not rush to a shipowner to buy a yacht worth tens of millions.
Bloomberg indeed paints the portrait of a strange bird. Despite his success, the person concerned apparently continues to live in a rather precarious way, as when he was at university. But above all, fortune was the opportunity to put into practice a philosophy that had fascinated his very Cartesian mind for a long time: effective altruism.
The principle is quite simple. In essence, it takes the form of what could be described as analytical philanthropy. Like all initiatives of this kind, the overall idea is to prioritize all the steps that could have a positive impact on the world.
But in the context of effective altruism, it is a matter of relying on a relatively scientific method. The objective is to determine precisely where, when and how to use its resources; its supporters thus seek to maximize this positive impact in the most objective way possible. And this regardless of any personal affect for a particular cause.
In his interview at Bloomberg, he dwells at length on the initiatives he has set up with his FTX partners as part of his approach to effective altruism.
A proponent of analytical philanthropy
The newspaper has indeed found the trace of several tens of millions of donations to various institutions that have remained anonymous. Note, however, that at present, his biggest expense still has nothing to do with charity. This is the name of the Miami Heat arena, recently renamed FTX Arena; a claw that will have cost him the trifle of 125 million dollars.
But what is more interesting is that he also applies this philosophy with his personal savings. He says he will continue to do so and even increase the pace. He would thus intend to give up to 99% of its annual income.
Sam Bankman-Fried just wishes he could continue to live comfortably; the founder of FTX explains that he will keep to a minimum $100,000 per year. Is around 6 times the French minimum wage. On the other hand, he claims that he will give away absolutely everything else, from cryptocurrencies to the smallest fiat penny.
It will therefore be interesting to see if he keeps his word, even if he does not seem to be particularly communicative on the nature of these gifts. However, it is important to remain lucid and remember that it could be a fine free advertisement aimed at the readership of Bloomberg, who remains a reference magazine in the world of business and finance. But this isn’t the first time he’s talked about his philosophy either, and his previous gifts are already speaking in his favor.
Whether justified or not, it has in any case offered an image of crypto-Robin Hood which is an exception in the world of finance. And it risks sticking to his skin for a while.