Sam Bankman-Fried is an odd 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 in the hope of hitting the jackpot. The majority of them risk having their hopes dashed on the first “dip”, but some still manage to get out of the game; this is the case of an American who made a fortune in this way and who now plans to redistribute 99% of his money.
The story was first documented by Bloomberg before being passed on by Interesting technique† We learn that the person involved, Sam Bankman-Fried, has always been drawn to finance. He cut his teeth on Wall Street; it was there that he quickly found a way to earn a lot of money.
In 2017, the cryptocurrency ecosystem was much less well-defined than it is today. In this burgeoning crypto jungle, he noticed that the prices of these virtual tokens very different depending on the fiat currency involved in the transaction. Bloomberg explains that at that time there could be up to 10% difference between the price of a Bitcoin in Japanese yen or in US dollars.
A detail that apparently seems too good to be true; it immediately jumped out at this data comparison analyst. Neither one nor two rushed to create a company dedicated to exploiting this flaw in the system. This difference eventually faded over time. But Banker-Fried’s responsiveness allowed it to pocket its first $20 million 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 had immediate success; a year later, the equivalent of a billion dollars was passing through the platform every day.
Currently, Bloomberg claims that it is the third largest platform in the world, with over $2 trillion in return. This success inevitably proved highly profitable for Bankman-Fried. It would weigh $24 billion today at just thirty years old.
Sam Bankman-Fried has more money than Ray Dalio and will likely 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 you might think with these kinds of American success stories, he didn’t rush to a shipowner to buy a yacht worth tens of millions.
Bloomberg does indeed paint the portrait of a strange bird. Despite his success, the person concerned apparently still lives in a rather precarious way, as when he was in university. But above all, fortune was the opportunity to put into practice a philosophy that had long fascinated his very Cartesian mind: effective altruism.
The principle is quite simple. Essentially, it takes the form of what can be described as analytical philanthropy. Like all initiatives of this kind, the general idea is to prioritize all steps that can 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 goal is to determine exactly where, when and how the resources should be used; its supporters thus strive to maximize this positive impact in the most objective way possible. And this regardless of any personal effect for a particular purpose.
In his interview on Bloomberg, he reflects extensively on the initiatives he has set up with his FTX partners as part of his approach to effective altruism.
An advocate of analytical philanthropy
Indeed, the newspaper has found traces of several tens of millions of donations to various institutions that have remained anonymous. Note, however, that his biggest outlay at this point still has nothing to do with charity. This is the name of the Miami Heat arena, recently renamed FTX Arena; a claw that cost him $125 million.
But what’s more interesting is that he also applies this philosophy to his personal savings. He says he will continue to do this and even increase the pace. So he would be planning to give up 99% of his annual income.
Sam Bankman-Fried wishes he could live comfortably; the founder of FTX explains that he will keep himself to a minimum $100,000 per year† Is nearby 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.
So it will be interesting to see if he keeps his word, even if he doesn’t seem to be particularly outspoken about the nature of these gifts. However, it is important to stay clear and remember that it can be a nice free ad targeting the readership of Bloomberg, who stays 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 past gifts already speak in his favor.
Right or wrong, it has at least provided a picture of crypto-Robin Hood being an exception in the financial world. And there is a risk that it will stick to his skin for a while.