According to one of the famous sayings in the traditional capital market, that when the waves get stronger, the strong emerge. The first half of 2022 rocked the crypto world from end to end. Entities that were at the top of the industry evaporated, while causing tremendous damage to investors, and on the other hand, various players who arrived liquid to the crisis, are gaining more and more power, and becoming dominant players with a horizontal effect on the entire market.
One of these players is Sam Bankman-Fried, the founder and owner of the FTX exchange. Although the crypto market was supposed to be a decentralized market, giants are slowly growing in it, and as mentioned, those who reached the crisis of 2022 with high liquidity are taking advantage of it to increase their power. Today, after an acquisition spree, Bankman-Fried is the most powerful man around.
The businessman who became a billionaire
Bankman-Fried was born in 1992 to parents who were law professors at Stanford. He has a bachelor’s degree in mathematics and a master’s degree in physics. In 2013 he started working in trading on Wall Street, at an ETF company. He quickly put his mathematical skills to use and founded a company, Alameda Research, that specializes in quantitative trading and exploiting arbitrage gaps.
In 2017 he jumped into the crypto world. The initial capital in the field was made by arbitrage differences between currency prices in different trading arenas in the US and abroad, mainly in the Far East. In 2019, he founded FTX, a cryptocurrency derivatives exchange, which is currently one of the largest exchanges in the crypto world in terms of daily trading volume .
On a personal level, he is also very involved in the politics behind the crypto industry, and through comments to bills and regulation and appearances in committees, he influences attempts at regulatory regulation in the industry. In American politics, he is one of the biggest contributors to President Biden’s campaign.
It supports utilitarian altruism, meaning making a profit with the goal of passing it on, and indeed FTX donates 1% of its revenue to charity. In 2022, he was ranked 60th on Forbes’ list of billionaires, with a net worth of $24 billion. After the declines in the markets, his fortune is estimated at about 8 billion dollars.
A never-ending shopping spree
Bankman Fried came to the crisis when it was very liquid, and very quickly became the official rescuer of the industry, buying entities that got into trouble, both through FTX, and through Alameda Research. Thus, he purchased 7.6% of the Robinhood platform, the Japanese stock exchange Liquid, whose condition was undermined after a cyber attack, and the Canadian company Bitvo.
On top of that, he acquired the crypto lending platforms BlockFi – which he bailed out in a $680 million credit deal, and Voyager Capital, which reached a situation where it sought protection from creditors, and stopped customer withdrawals, after being hit by the collapse of the 3AC hedge fund. Bankman-Fried even offered to be involved in the rescue of Celsius, but this did not come to fruition.
FTX’s latest deal, forged in the last week, is for the acquisition of the South Korean exchange Bithumb. Bankman-Fried, positions himself as the Robin Hood of the crypto world – both in front of the various bodies that are in the field and looking for rescue, and also in front of the small investors, who in the recent collapses found themselves last in line, because they became unsecured creditors.
For example, it allows Voyager customers to open a new account through FTX with a cash balance, part of which is the liquidation of the funds frozen on the platform. The purpose of the proposal is to allow customers to continue trading the crypto assets, or withdraw them, so that their value does not increase and decrease as long as they are frozen under Voyager’s procedures.
He speaks a lot about how he sees FTX’s role in stabilizing the crypto world, and that he has a “billion dollars” to invest in it. For example, he noted that “we have a responsibility to intervene, even at the cost of a loss to ourselves, in order to curb the contagion effect in the difficulties of the various crypto entities, even if we did not cause it or were not involved in it. This is what is important to the ecosystem of the crypto world, and I want Do what is possible to help her grow and prosper.”
Investors are looking for someone to hang on to
Despite the Robin Hood image he cultivates, Bankman-Fried is a very shrewd businessman, who takes advantage of the difficulties and liquidity crisis in the field to increase the empire he has built, and increase his hold on the market.
Is this good for the crypto world? It seems that the principles of decentralization that were the ideological foundation of the decentralized currencies are getting further and further away from the crypto world. We should note that the investors themselves are also looking for someone to take their eyes on.
For example, one of the most prominent people in the field so far was Tesla founder Elon Musk, who in every tweet of his moved and bounced worthless water coins. Musk reduced his presence in the crypto world after Tesla sold almost a billion dollars worth of crypto in the second quarter of this year. Now, Bankman-Fried is establishing his position as the strong man of crypto, and the true meaning of his power will be revealed when the crypto winter ends, and the cycle of the next rises begins.