Why a 30-Year-Old Crypto Billionaire Wants to Donate Nearly His Entire Fortune


The Robin Hood of Bitcoin | The Story of Bankman-Fried
The Robin Hood of Bitcoin | The Story of Bankman-Fried
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Samuel Bankman-Fried could be a fairly normal student – with his long curly hair sticking out in all directions, the T-shirts and sweaters he wears for almost every occasion, his somewhat untidy room with pants and other garb scattered across the room, and his gamer chair and headset that he uses to play computer games and also for work.

But his life is far from “normal”. Bankman-Fried is only 30 and already a billionaire, has contact with Jeff Bezos, David Solomon, Katy Perry, Leonardo DiCaprio, prime ministers and senators, and wants to save the world on the side. All from his desk, next to which he says he even sleeps – not on a bed but on a beanbag, usually for less than five hours a night. 

Despite his fortune, which now exceeds $26 billion, Bankman-Fried forgoes expensive suits, cars, watches or yachts. Instead driving a Toyota Corolla around the streets of the Bahamas and, by his own admission, wants to donate 99 percent of his fortune “as effectively as possible.” Who is this man?

Talent, Luck, and Timing

At least to crypto industry enthusiasts, Bankman-Fried has been a familiar name for several years. He is the CEO of the Bahamas-based cryptocurrency exchange FTX, where cryptocurrencies such as Bitcoin, Ethereum or Tether and other currencies with an average value of ten billion US dollars are bought, sold or exchanged on a daily basis. 

FTX retains a certain percentage of fees for brokering buyers and sellers – with which the company easily earns several hundred million US dollars every year.

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That Bankman-Fried himself became the main beneficiary of the Bitcoin boom was probably due to a combination of talent, luck, and good timing – similar to the perks of using a Kucoin crypto bot.

The son of two Stanford parents, Bankman-Fried stood out early with his mathematical talent, according to those close to him, and later studied mathematics and physics at MIT. 

Meanwhile, Bankman-Fried says he engaged with the work of moral philosopher Peter Singer and other philosophers, including William MacAskill, Toby Ord and Thomas Pogge, who were and are part of the burgeoning movement known as “effective altruism.”

“Earning to Give”

The idea: with the help of rational and scientific arguments, money should be donated in a way that maximizes its benefit to as many people as possible – an efficient cost-benefit calculation, so to speak, to make the world a better place. 

Singer once put the argument for effective altruism this way: Would you save a drowning child from a pond if you were just walking by it? Since everyone would probably answer in the affirmative, Singer went on to conclude that we also have an obligation to save children in other countries from starvation, for example, by donating to an aid organization. 

The “effectiveness” of donations, according to Singer, is then based on something like how much money a particular organization needs to save a life.

Bankman-Fried was excited by the idea of effective altruism and decided he could make the biggest contribution by first earning as much money as possible: “Earn to give,” is the motto altruists like MacAskill espouse. 

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For three years, Samuel Bankman-Fried therefore worked on Wall Street and, by his own account, donated half of his salary each year to animal welfare organizations – until a much faster and easier way of getting as much money as possible presented itself soon after.

Profiting from Crypto

In 2017, in the midst of the first boom in cryptocurrency Bitcoin, Bankman-Fried, who later admitted to having little understanding of cryptocurrency at the time, noticed that Bitcoin was trading ten percent higher in Japan compared to the United States. 

If someone simply bought Bitcoin in the U.S. and then sold it in Japan, a ten percent profit could be made every day, he reasoned.

Together with colleagues, Bankman-Fried founded the trading company Alameda Research, and after overcoming some hurdles, the simple exchange actually succeeded. By the time Bitcoin prices in both countries adjusted in early 2018, Bankman-Fried and his team had raised about $20 million. 

They had profited from a crypto world that until then had been lightly regulated and had continued to swell like a massive bubble with the influx of many inexperienced buyers.

Increase Effectiveness

Instead of immediately donating the money to charity, Bankman-Fried invested it in building FTX, which specializes primarily in business with large trading firms. 

To escape stricter crypto trading regulations in the U.S., he moved the company’s headquarters first to Hong Kong and then from there to the Bahamas and registered it in Antigua and Barbuda, where it has since made billions of dollars in his pockets.

Bankman-Fried plans to donate 99 percent of his fortune, he tells Bloomberg – to organizations he sees as “most effective” in fighting things like the spread of the coronavirus, the outbreak of future pandemics or climate change. 

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Only one percent of his wealth, about $100,000 a year, he said, he wants to keep to live a comfortable life. As a result, some are already calling Bankman-Fried a “crypto-robin-hood”: one who harnesses the money-making mechanisms of capitalism to help poorer people.

Lobbying in Washington

The reality is somewhat different. So far, Bankman-Fried has donated only 0.2 percent of his money – which still amounts to about $50 million. 

Instead, he is investing $135 million over the next 19 years with FTX to secure sponsorship rights to the Miami Heat’s basketball arena, butting hundreds of millions of dollars into an eSports team and Mercedes’ Formula One team to get the FTX logo more exposure.

Plus, he’s investing millions of dollars in lobbying in Washington to stop stricter regulations on cryptocurrencies, as critics accuse him of doing.

For Bankman-Fried, in any case, the investments do not contradict the approach of effective altruism. He is pursuing a long-term strategy to one day be able to donate the maximum amount of money, he says. 

But even if the goals of the donations of effective altruists like Bankman-Fried may be noble (many critics, however, already doubt the altruists’ assumptions that effectiveness can be objectively measured), some question whether the end really justifies the means. 

For the financial industry itself drives inequality, the crypto industry in turn drives crime, the financial ruin of some people, and through its high energy consumption also climate change, according to the critics.


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anamika sinha