OXBC Spotlight: Sam Bankman-Fried Earning to Give, FTX and the Game of Crypto Thrones.

California-born Sam Bankman-Fried launched FTX — a derivatives-focused cryptocurrency exchange in 2019. Earlier this month, he raised $900m in a funding round that valued FTX at $18bn. But Bankman-Fried, 29, is no ordinary Billionaire.

He has set his sights on helping to secure the long-term future of humanity and plans to donate most of his estimated $10bn wealth to high-impact charities.

After a recent severing of ties with former bedfellows Binance, it is also clear that FTX has set its sights on claiming the crypto-exchange throne. Could Bankman-Fried’s approach to regulatory compliance combined with a healthy dose of altruism bring about a sea of change in the blockchain space and beyond?

Earning to Give

Bankman-Fried was introduced to the concept of ‘earning to give’ back in 2013 by Will MacAskill, the co-founder of 8,000 Hours. MacAskill’s ‘earning to give’ concept is aimed at those who may eschew higher-earning opportunities in order to look for roles in the non-profit sector that would allow them to ‘make a difference’. Whilst this is an exceedingly noble charge, the truth is that in many cases, such individuals would actually make a bigger difference by donating a percentage of their salary from the higher earning job, in order to fund the work of experts in the non-profit field.

In this vein, recognising that he himself did not necessarily have the capacity to create meaningful change alone, Bankman-Fried understood that his rare skill set could instead fund the activities of others in the pursuit of charitable impact.

After graduating from Massachusetts Institute of Technology in 2014, Bankman-Fried took a job at Jane Street Capital — a Wall Street quantitative trading firm which enabled him to donate six-figure sums over a 2 year period to projects dealing with major global problems and animal welfare.

This is a practice Bankman-Fried has continued to this day, with The FTX Foundation allocating 1% of net fees on FTX to effective charities — so far, totalling $3m. His appetite for change extends to political involvement too, with the Wall Street Journal reporting that a $5m donation made Bankman-Fried the second-biggest CEO supporter of Mr. Biden after Michael Bloomberg.

Driving change in the Crypto Space

The dramatic rise of FTX has demonstrated that giving doesn’t have to impede corporate growth. Perhaps though, that is in no small part due to the fact that in a market littered with centralised exchanges that all feel ‘the same,’ FTX has always had the whiff of ‘something different’ about it.

After bursting onto the scene, FTX became one of the first ‘reputable’ exchanges to offer perpetual cryptocurrency futures trading — meaning users could hold their leveraged positions as long as they avoided liquidation.

They soon became known for their innovative Index Pepetuals, allowing users to take a position on a basket of categorised coins such as ‘high market cap’ coins or the infamous ‘SH*T-PERP’ collection of low-cap altcoins.

Other innovative products included the Presidential Election futures, whereby users could take a position on US presidential candidates prior to the election, with contracts expiring at $1 if their selected candidate was to win and at $0 in defeat. FTX’s leveraged tokens concept — where users are able to purchase ‘BULL’ or ‘BEAR’ versions of tokens which track 3x leverage positions (but without the liquidation or funding fees) has also enjoyed considerable success.

‘A Song of Ice and Fire’

If you squint, and turn your head sideways, you can definitely see some parallels between FTX’s relationship with fellow crypto-exchange behemoth Binance, and the fantasy series ‘A Game of Thrones’.

In George R.R. Martin’s epic tale (massive SPOILER ALERT), two protagonists began worlds apart. As their quest for the throne brought them closer and closer together — whilst all other competitors met with some kind of bloody demise- they eventually fell in love before realising they were related and one killed the other. The leading man, and moral compass of the show, fearing his former lover (and newly discovered aunt) had become too power-hungry to rule, dealing the fatal blow.

Conversely, FTX and Binance — the Ice and Fire of the crypto landscape — actually started out as close relatives. In December 2019, mere months after FTX launched, Bankman-Fried’s platform received a giant ‘leg-up’ in the form of a strategic investment from Binance.

All was rosy in the garden, it seemed. FTX received substantial funding from Changpeng Zhao’s Binance, and saw their native FTT token listed on the number one exchange (by volume) in the world. In return, Binance gained exposure to the expertise Bankman-Fried’s team had in the derivatives market, as well as being able to offer customers a range of FTX’s leveraged ‘BULL’ and ‘BEAR’ tokens.

Both exchanges enjoyed heightened growth in the ensuing period — acquiring ever larger user bases whilst watching other pretenders to the throne being starved out of the market or ‘hacked’ to eventual death (in the case of Cryptopia, for example).

However, just weeks ago, a severing of ties was announced, as FTX bought out Binance’s investment in the company with Bankman-Fried explaining “”I think there are some differences between how we run our businesses”.

Many have suggested that a differing attitude to regulatory compliance could be behind Bankman-Fried’s decision to distance FTX from Binance. His comments in an interview with Decrypt on Binance’s recent issues with regulators, were fairly telling in that respect: “It’s been quite the barrage. I’m not involved in the conversations between them and regulators, and so all I can do is speculate, but something I’ll say is that we try really hard to be as cooperative as we can with regulators… I think that when you don’t do that, and when you sort of appear less flexible or responsive, I think that’s more likely to lead to cases where regulators might feel like they have no choice but to start bringing the hammer.”

Perhaps playing the Game of Cryptocurrency Thrones whilst being so closely related to the current incumbent had simply become too uncomfortable after all.

It will be interesting to see whether the ice-cool approach of Bankman-Fried will win out over the ‘fiery dragon’ that is Binance in the end. Either way, it seems likely that the word will benefit from the competition thanks to Bankman-Fried’s commitment to earning to give.

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