Ex-crypto billionaire and bitcoin genius Sam Bankman-Fried, briefly worth $30 billion, realized even better than others that money in the modern world relies on imagination.
Lesson number one: If you want to win over Silicon Valley’s wealthiest venture capitalists, don’t do it smartly dressed, neatly haircut, perfectly prepared and optimally focused. Look how Sam Bankman-Fried did it: in shorts and T-shirt, with wild hair, relaxed and nonchalant, even a little distracted, because he was gaming during the conversation.
In a half-hour video conference, Bankman-Fried, then in his twenties, raised a few hundred million from Sequoia Capital. The men of Sequoia felt in their water that they were dealing with a child prodigy of the caliber of Steve Jobs. They thought so too, or perhaps even more so, because they couldn’t quite follow what Sam Bankman-Fried was talking about. If you don’t understand what someone is doing, then you’re really in the right place, they knew at Sequoia about investments in Apple and Google. Such a person is nice and young, a little strange, confident in a completely natural way and goes on terra incognita. In a 13,000-word hagiography that Sequoia Capital has now unfortunately taken offline, Bankman-Fried called a magician and a crypto genius.
In profiles over the last few weeks, “genius” has been tagged with words like “alleged” or “former.” At the beginning of this fall, the now 30-year-old Bankman-Fried was still worth almost 30 billion, according to Forbes, now nothing. He created his fortune in record time but lost it even faster. For three years they called him ‘some kind of Steve Jobs’, now they suddenly find him ‘some kind of Elizabeth Holmes’, the woman who became Silicon Valley’s youngest CEO with a fictitious blood test machine and was recently sentenced to 11 years in prison for fraud.
Both comparisons are undeserved, you can argue. Born in 1992 to two Stanford professors, Sam Bankman-Fried appears to have operated neither genius nor criminal. Originally he is an adept of ‘effective altruism’, in which you only earn money to give it away. “Just a nice guy,” colleagues at the Massachusetts Institute of Technology called him—it’s never been said about Steve Jobs or Mark Zuckerberg.
An ‘ordinary boy’
This ‘ordinary nice guy’ realized perhaps better than his peers that money in the modern world is a fantasy, that the days of gold bars in cellars will never come again. That digital revolution, Bankman-Fried understood, has accelerated a development in which money is where people believe it is, in which you create money by creating an illusion of money. Bitcoin is little more than a shared fantasy of people online.
Everyone understands how Bankman-Fried made his first millions: he sold American bitcoins in East Asia, where the price was much higher. After that, he started his cryptocurrency trading firm Alameda, then his own crypto trading platform FTX. Alameda held almost half of his financial reserves in FFT, the native crypto currency of, yes, the proprietary platform FTX.
Inventing your own currency and expressing your own wealth in it: many did it, nobody became as big with it as Bankman-Fried. In May, he was the star of a cryptocurrency conference in the Bahamas with Tony Blair, Bill Clinton and top model Gisele Bündchen. A month later, the price of bitcoin plummeted. Things only went wrong for Bankman-Fried at the beginning of November, when it was leaked that he mainly kept reserves ‘in his own currency’. ‘His opulence is self-invented opulence!’, all kinds of people suddenly shouted indignantly.
A vicious competitor relinquished his FFT reserves on the grounds that this Emperor has no clothes on. But that cryptocurrency universe is only populated by naked emperors.