Cryptocurrency companies are having a tough year to say the least because of the collapse in the price of digital assets. But there are those who in this historical moment, renamed by many as the ‘new crypto winter’, have worked hard to exploit this situation. This is the case with crypto platform FTX di Sam Bankman-Fried, emerged as an industry guarantee, rescuing troubled lenders.
Sam Bankman-Fried reveals how he made his fortune
The 30-year-old crypto billionaire revealed that he had been shopping amid the recent industry carnage and said he still has money to spend if the opportunity comes. A fact that may seem strange. Other multi-billion dollar cryptocurrency giants went bankrupt this year. FTX’s main competitor, Coinbasesaw its stock plummet by 70% and laid off a fifth of its workforce due to the collapse in cryptocurrency prices.
Still, FTX is somehow emerging as an industry lifeline. The recipe according to the 30-year-old billionaire was to have amassed ample cash, kept overheads low, avoided lending, and be able to move quickly as a private company. “It was important that the industry get out of it whole,” Bankman-Fried told CNBC in an interview. “It won’t be good for anyone, in the long run, if there are real pains and explosions: it’s not fair for customers and it won’t be good for regulation.”
The cryptocurrency industry has seen billions of dollars wiped out during the weeks that have accompanied theimplosion of the cryptocurrency Terra USD and the fallimento dell’hedge fund Three Arrows Capital. Lenders exposed to Three Arrows were the next domino to fall. In July, FTX signed an agreement that gives it the option to purchase the BlockFi lender after providing a $ 250 million line of credit. FTX also granted $ 500 million to ailing Voyager Digital, which later filed for bankruptcy, and was in discussion for the acquisition of South Korean cryptocurrency exchange Bithumb.
Bitcoin, the largest cryptocurrency in the world, has lost more than half of its value this year. Although Bankman-Fried’s FTX cryptocurrency exchange is suffering from the decline in digital assets, it said the growth in market share has helped offset the pain. “I don’t think we’re immune to it,” Bankman-Fried said. “But over the past year we’ve worked hard to grow our footprint… and we have one platform less exposed to retailwhich tend to depend more on market sentiment ”.
Bankman-Fried graduated with a BS in physics from the Massachusetts Institute of Technology and began his career as a quantitative trader at Jane Street Capital. He bought his first bitcoin five years ago and said he was drawn to the industry by ample arbitrage opportunities that seemed “too good to be true”.
Warren Buffett’s dictates applied to crypto
Bankman-Fried’s latest moves in the cryptocurrency industry have been compared with the strategy implemented by Warren Buffett in 2008. The legendary president and CEO of Berkshire Hathaway helped curb the bleeding during the financial crisis with a $ 5 billion investment in Goldman Sachs. Eventually the Omaha, Nebraska conglomerate earned $ 3 billion.
“There are some parallels,” Bankman-Fried said. “But the differences are probably bigger. First of all, I don’t think Warren Buffett would call me the next Warren Buffett. To the extent that there is a parallel, we have recently looked at which businesses are in a position where they have a strong need for capital ”. Bankman-Fried said he is finding places where he can “simultaneously make good investments and help support customers and the ecosystem.” Although sometimes it is possible to offer only one, not both.
He also praised Buffett’s ability to invest in long-term value. The investor demonstrated that “it is not necessary to have a brilliant innovation or intuition, but it can be done by putting together one good decision after another over the course of decades, and combining it all”. Come Buffett, Bankman-Fried ha firmato il Giving Pledge: a promise from the richest men in the world to donate most of their wealth to charity. Bankman-Fried said it has donated approximately $ 100 million this year, with a focus on preventing future pandemics. Like Buffett, Bankman-Fried also lives modestly, sharing a house with 10 roommates and a Goldendoodle named Gopher. He also drives a Toyota Corolla and has stated that he is not interested in yachts or Lamborghinis.
But the two “humble” investors diverge sharply when it comes to their positions on cryptocurrencies. Buffett and his business partner Charlie Munger have criticized cryptocurrencies over the years. In 2018, for example, Buffett called bitcoin “probably square rat poison”. Earlier this year, the Oracle of Ohama also stated that it would not buy all the bitcoins in the world even for $ 25 because they “produce nothing”.
Buffett called the underlying blockchain technology “important”, but did not hesitate to say that “bitcoin has no unique value”. “I certainly disagree,” Bankman-Fried said. “Hope that too [Buffett] disagree. I don’t think he should run a company if he thinks so, but I don’t think he really thinks that. I think it’s most likely an exaggeration, ”she said. “He hasn’t grasped some of the potential of the blockchain, but he hasn’t grasped the stimulus that pushed it to create a new tool either.”