30-year-old crypto billionaire wants to give away 99 percent of his wealth
30-year-old, Sam Bankman-Fried, is a textbook example of a modern-day tech billionaire who got rich overnight. He thinks sleeping is a waste of time, plays video games during meetings, and is also vegan. But instead of buying the luxuries of the world, Bankman-Fried wants to give away his wealth so others may benefit, Bloomberg reported.
Not much has changed for Bankman-Fried since his college days at MIT, where he lived in shared accommodation, stayed up all night playing board games, and slept in bunk beds with members of his fraternity group. Except for FTX, the company he founded is the third-largest crypto exchange in the world and as many as five of his co-workers are also billionaires.
The Loopholes in the cryptomarkets
Prior to founding his company, Bankman-Fried worked on Wall Street for three years. In 2017, he noticed that crypto exchanges, places where investors could buy crypto coins using fiat currencies like the U.S. dollar or the Japanese yen listed the altcoin prices with a difference. At times, the difference between buying Bitcoin in Japan and that in the U.S. could be as much as 10 percent.
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So, Bankman-Fried set up a company to do exactly that and pocket the differential amount. Although this might sound easy, Bloomberg reported that the company had to run operations in the U.S. and Japan with a heist-like accuracy to maximize the money that could be made every day. The price differences disappeared after a while but Bankman-Fried's company had made over $20 million by then.
After attending a Bitcoin conference in Macau in 2019, Bankman-Fried and his friends invested these winnings in setting up the crypto exchange, FTX, which promised smoother transactions, a host of options to trade in, and even use cash as collateral. Investors thronged FTX and a year later, the exchange was trading over a billion dollars annually, generating over $350 million in profit.
Two years later, FTX trades are worth $344 billion but Bankman-Fried has his eye on Binance, the top crypto exchange with trades nearing $2 trillion. But he does not want to reach there to buy himself the luxuries of the world. Instead, he wants to give most of it away to charities that are not owned by him.
Bankman-Fried believes in the philosophy of 'Effective altruism' that uses scientific reasoning to figure out how to do maximum good for most people. He believes there are only limited ways in which money can buy happiness and wants to earn more money to give it away.
Even as a trader on Wall Street, Bankman-Fried gave away more than 50 percent of his salary to charities and last year donated $50 million to FTX Official and anti-global warming initiatives. For this year, he plans to spend a few hundred million on other charities to focus on pandemic preparedness.
For a brief period, Bankman-Fried was also pondering over a decision to buy up coal mines to prevent emissions and also serve as an energy reserve in the future. He has since dropped the idea since it was not cost-effective, but venture capitalists have pumped more money into his company so that it can grow further.
For Bankman-Fried, the aim remains the same, to donate the money he earns and he has never thought about this decision twice.