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?
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