August 8, 2022

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Exclusive: How billionaire Sam Bankman-Fried approaches a crypto deal

2 min read

Depending on who you ask, Sam Bankman-Fried is either crypto’s “white knight”—or else a mercenary intent on scooping up deals at a time when the latest downturn has many companies on the ropes. Perhaps unsurprisingly, the 30-year-old multibillionaire who runs the massive crypto exchange FTX views himself as the former. 

Bankman-Fried, widely known as SBF, admits he first entered crypto to make a lot of money. But in Fortune’s latest cover feature, he says that his overall motive—especially as of late—is also to contribute to the greater good. “I want to be in a position where when we work with people, we’re a little more generous than we have particular reason to be,” he said.

But, what’s his strategy when it comes to who—or what—he invests in, and how does he approach a deal?

“There are a few things that go into it,” SBF said.

Breaking down the crypto kingpin’s investment strategy

When the algorithmic stablecoin Terra imploded in May, it set off a domino effect that hit the industry’s largest players alongside everyday investors. By summer, the industry was reeling from a market crash so bad even Bankman-Fried would “not have guessed” it. 

With cryptocurrency investors in trouble—their life savings stuck on platforms without much hope of return—and the industry’s future in question, Bankman-Fried decided to step in. Investing directly, or though FTX or Alameda Research (a trading shop he founded), SBF offered lifelines to a number of battered crypto companies, from broker Voyager Digital to lender BlockFi. 

In assessing a prospective investment—or rescue mission—SBF says he first asks himself: “Is there a way for us to backstop customer assets?”

When looking at a “potentially endangered company,” he looks at whether their “endangered” customer assets could be backstopped, he said. “BlockFi is an example where the answer was just ‘Yes.’” But why? 

Though BlockFi…

Taylor Locke

2022-08-02 22:15:00

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