Many people have swiftly become wealthy with cryptocurrencies. But few people have amassed wealth as quickly as Sam Bankman-Fried. Forbes estimates his net worth to be $24.5 billion, although this figure could be conservative.
According to Bankman-Fried, “I think it was correct when they published it” this week. “I believe it is currently a little bit higher,”. The FTX exchange, which he co-founded in 2019, is now one of the world's largest cryptocurrency trading platforms and the source of Bankman's fortune.
The Bahamas-based exchange collected $400 million from prestigious investment companies including SoftBank, Tiger Global, and Temasek last month, valuing it at $32 billion. Its $8 billion US spinoff is worth
The FTX exchange is now worth more than Twitter, the Nasdaq, and Deutsche Bank combined. Not too shabby for a three-year-old business.
How Did Sam Bankman-Fried Become a Crypto Billionaire in 5 years
After earning a physics degree from MIT, Bankman-Fried was hired by the Wall Street trading company Jane Street in 2014. Three years later, he started the cryptocurrency trading business Alameda Research. It quickly started making a lot of money by taking advantage of price differences on international markets.
By 2018, he had realized that the current cryptocurrency exchanges just weren't very good; they were unstable, dangerous, and offered scant customer service.
You thought, “We can do better than this.” “These are very core, crucial, useful systems, which are pretty poor right now,” he said.
Gary Wang, who also went to MIT and used to work as a software engineer for Google, and Bankman-Fried thought they knew enough about technology to make an exchange.
Was it possible for them to draw in customers? Bankman-Fried reported that the responses “ranged from maybe not to definitely not.” “At around 20%, I was the most hopeful.”
But clients trickled in over time. People began informing their friends and posting about the new transaction on social media. The trickle quickly became a flood in 2021, with FTX reaching 5 million users by year's end and daily traffic reaching a record $60 billion in May.
Check out the December profile from Insider: The founder of FTX, Sam Bankman-Fried, gets by on four hours of sleep and six displays of multitasking. Insiders analyze the difficult issues his organization is experiencing as well as the genuine personality of the 29-year-old crypto millionaire.
How Did Sam Bankman-Fried Become a Crypto Billionaire in 5 years
According to Bankman-Fried, FTX's success is largely due to how infrequently crashes occur. Additionally, its strategy of enabling traders to have a single account with an offset of their margin balances rather than many margin accounts attracts traders. Margin is the term for the amount of money a broker loans to a trader.
They also enjoy the intricate crypto derivatives that FTX specializes in, which let them wager on the potential price movements of well-known coins like bitcoin and ethereum. Regulators and lawmakers are strongly focused on FTX as a center of dangerous trading activity.
Democrat Sen. Sherrod Brown questioned Bankman-Fried last week when he found himself before Congress: “Is it foolish for crypto businesses to make money by giving Americans such a hazardous, unsafe product?”
Users of FTX are split nearly 50/50 between institutional and private investors. However, roughly 80% of the income and volume are generated by institutions like high-frequency trading companies, hedge funds, and family offices. Contrast that with Coinbase, the largest exchange in the US, whose primary source of income is retail trading.
FTX today employs over 250 people, up from four at the beginning. FTX is valued at $4 billion more than Deutsche Bank, which has more than 80,000 employees.
Investors are clamoring for shares in the exchange, but Bankman-Fried claims he is under no obligation to go public. “We are profitable, therefore we don't need the capital,” he remarked. We will act in a way that feels best for the business.
