Portrait of “Mark Zuckerberg of cryptocurrency”: From an exceptional student, mastering the techniques of building the world’s top FTX exchange, to a billionaire at the age of 29

A lot of people got rich quickly thanks to cryptocurrencies. But not many get rich quick like Sam Bankman-Fried. “To me, he’s like the Mark Zuckerberg of crypto,” said Edith Yeung, a venture capitalist at Race Capital and one of FTX’s seed investors. And indeed Bankman-Fried is the only person along with Mark Zuckerberg to get rich quickly, according to Forbes.

According to Forbes, this young man’s fortune is currently 24.5 billion USD.

Sam Bankman-Fried co-founded crypto exchange FTX in 2019

The journey to create one of the largest exchanges in the world

Bankman-Fried assets are built from the FTX exchange, which he co-founded in 2019 and is currently one of the largest cryptocurrency trading platforms in the world.

The Bahamas-based exchange hit a $32 billion valuation last month after raising $400 million from investment giants such as SoftBank, Tiger Global and Temasek. An affiliate of the platform in the US is valued at $8 billion.

The FTX exchange is now worth more than Twitter, the Nasdaq stock exchange and Germany’s Deutsche Bank. This is not a bad achievement for a company that is only 3 years old.

Bankman-Fried graduated from MIT with a degree in physics and then worked as a teller for Jane Street on Wall Street in 2014. Three years later, he founded the cryptocurrency trading company Alameda Research, which he soon earned. a large sum of money thanks to the price difference in the global market.

By 2018, the young man realized that current cryptocurrency exchanges are not convenient to use: always glitchy, insecure, and no customer support.

“Vital, valuable platforms like this are doing badly and we can do better,” Sam said.

Bankman-Fried and co-founder Gary Wang, an MIT graduate student and former Google software engineer, think they hold the technical know-how to build an exchange.

The question is, can they attract customers? “The answer is probably no and probably no,” says Bankman-Fried. “I’m the most optimistic person, and I just think the odds are 20%.”

But gradually the customers came. People started talking about the new crypto exchange on social media and telling their friends. From a small community of users to a large network in 2021: FTX has 5 million users by year-end, with daily trading volume hitting a record $60 billion in May.

A key part of FTX’s success is that crashes are so rare, says Bankman-Fried. On top of that, traders are attracted by the policy that allows them to have one account where the margin balances offset each other, rather than multiple margin accounts. (Margin means borrowing money from a broker to trade.)

And they love the way FTX works, allowing them to bet on the futures prices of major cryptocurrencies like bitcoin and ethereum.

Users of FTX are individual and institutional investors with a 50/50 ratio. However, institutions, such as high-frequency trading firms, hedge funds and family offices, generate about 80% of the revenue and trading volume. This is in sharp contrast to Coinbase, the largest US exchange, which derives most of its revenue from retail traders.

FTX – one of the largest cryptocurrency exchanges in the world

From 4 employees at the beginning, FTX now has about 250 people. In contrast, Deutsche Bank, which is worth $4 billion less than FTX, has more than 80,000.

Investors are working hard to get a part of the exchange, but Bankman-Fried said: “We don’t need capital, we’re profitable right now,” he said, “We’ll do anything. what feels right for the company”.

“Crypto’s Moby Dick Whale”

Sam himself usually only sleeps 4 hours and works with 5 screens at a time. “You’ll often see him watching football on one screen, watching Rihanna-like YouTube videos on another, replying to messages on the third, trading on the fourth, making phone calls on the third. Thursday, it’s all on at once,” said Caroline Ellison, co-CEO of Alameda Research.

It’s a skill Sam honed as an adult from Silicon Valley. Sam is the eldest in the family with his parents being Stanford University law professors. He and his younger brother, Gabe, enjoy “intellectual challenges” with games such as chess. But playing one game at a time wasn’t challenging enough for Bankman-Fried as an adult.

As a student at the Massachusetts Institute of Technology, Bankman-Fried joined a group of 20 students named Epsilon Theta. Sam’s group often organizes party events and games. Besides maintaining good academic results, he is also the one who organizes collective activities.

Bankman-Fried often jokes about being an “outrageous student” at the university: “I only study for an hour and a half a day and have a hard time arriving on time,” he says: “I’m a real student. neglige”.

But by the time Sam joined Wall Street stock exchange Jane Street in June 2014, his time management skills had become one of his personal strengths. He was someone who enjoyed intellectual challenges and soon mastered the art of making quick decisions under high pressure, according to Ellison.

In Jane Street, Bankman-Fried learned how to carefully execute arbitrage trades, knowing the difference in the trading prices of ETFs on various global exchanges.

But it wasn’t until he started trading in the incredibly volatile crypto markets that his ability to execute orders really began to shine. Sam founded Alameda Research in Berkeley, California, in October 2017. It was at this company that Sam launched the “fate” bitcoin trading orders.

He can identify opportunities and decide to exit faster than most traders. This uncanny ability soon earned him the moniker “crypto Moby Dick whale” – demonstrating the effectiveness of the trades Sam executed in the crypto market on behalf of Alameda Research.

Synthetic