Most Influential 2021: Sam Bankman-Fried

He might now be a billionaire, but Samuel Bankman-Fried still has that wild puff of hair. It’s hair that screams “just rolled out of bed.” Or a beanbag chair. “I’m up to something like 50%, in terms of sleeping on beds,” Bankman-Fried tells CoinDesk.

The 50% is a big deal. And beds were once a luxury that Bankman-Fried couldn’t afford. Only a year ago, the former trader spent most nights sleeping under his desk in Hong Kong while launching a then-obscure trading firm. (I called him once at 3:30 a.m. Hong Kong time. He was at the office and happily took my call.) Most Americans had never heard of FTX. Even most bitcoiners had never heard of FTX, an exchange that – at the time – focused on professional trading products like derivatives.

This post is part of CoinDesk’s Most Influential 2021 series. Pindar Van Arman’s NFT portrait of Sam Bankman-Fried is available at SuperRare.

Fast forward one year.

The Miami Heat now play in the FTX Arena. Tom Brady and Gisele Bündchen star in FTX commercials. During the World Series, you couldn’t miss the FTX signs behind home plate, the countless FTX commercials, or the FTX patches on the umpires’ uniforms. FTX became “the official cryptocurrency exchange of MLB,” as if baseball has used a crypto exchange since the days of Mickey Mantle.

Flush off a $420 million round of fundraising, FTX is now worth an estimated $25 billion, and Bankman-Fried – not yet 30 – is one of the richest and most powerful people on the planet.

That doesn’t seem to have changed the man. He still eats “when it seems appropriate for the given day,” which sometimes means 3 p.m., sometimes 3 a.m. He remains a vegan for humanitarian reasons (“it’s all for animal welfare”), and he still reaches for his beloved Oreos, “one of nature’s more surprising vegan foods.”

And he’s laser-focused on regulation. Earlier in the year, Bankman-Fried spent five hours a day personally dealing with regulatory issues, and he expects regulation to loom over 2022. “It’s a messy world, and there are 195 countries out there,” he says. “Each one is separately exploring what their regulatory framework will look like. We’re trying to stay abreast of all of them.”

Regulation is what drove FTX to move its headquarters from Hong Kong to the Bahamas, because Bankman-Fried says the islands “have a comprehensive regulatory framework for crypto, and very few countries have that.”

Bankman-Fried sees over-regulation as the biggest risk to bitcoin. He views a “hard ban” as unlikely, but acknowledges risk in a “soft ban.”

Pindar Van Arman’s NFT portrait of Sam Bankman-Fried is available at SuperRare.

“If we saw coordinated action of restricting access to cryptocurrency projects in the United States and the European Union, that could have a materially bad impact on the market,” the FTX CEO says.

As for regulation in 2022? Bankman-Fried predicts there will “almost certainly” be some type of stablecoin regulation, because there’s “a lot of noise around it, and there’s a lot of will for it,” such as periodic audits of what’s backing the tokens. That could have merit. Like the Winklevoss twins, Bankman-Fried views regulation in the U.S. as inevitable and even useful, telling CNN that “the strongest version of the crypto industry is one that does have regulatory oversight.”

Some risks to bitcoin, Bankman-Fried says, have already become less concerning. Exhibit A: the risk of institutional investors fleeing the market. He finds it useful to compare the state of bitcoin today, at the end of 2021, with bitcoin at the end of 2017.

“Going into 2018, there was an enormous amount of excitement,” Bankman-Fried says, as “institutions worldwide were actively trying to decide whether or not to get involved.” Then came the crash. These crypto-curious institutions felt they had dodged a bullet, and they remained on the sidelines. The price of bitcoin languished.

“It ended up taking another two or three years for a number of them to get in,” Bankman-Fried says. He imagines that if a crash had occurred during the summer of 2020, perhaps that would have dissuaded large institutions from entering crypto. But now they are in. The die is cast. “At this point, I think many of them are more committed to it now than they were,” says Bankman-Fried, and he expects more to join the party in 2022. “It would take substantially more negative effects to halt that momentum.”

I was curious what the “negative effects” could mean for FTX itself, particularly given its massive expansion. To the outside eye, it seems that FTX spent like a drunken sailor on the advertising spree. And that happened during a throbbing bull run, where everyone looks like a genius. What would happen to FTX if, say, the price of bitcoin plummets?

Bankman-Fried isn’t losing sleep over that, or at least any more sleep than usual. First, and amazingly, he says FTX’s entire endorsement and partnership budget accounts for less than 10% of 2021 revenue, and so it’s “not a huge hit on that front.” If bitcoin crashed to $20,000, theoretically, Bankman-Fried would expect long-term revenue (“or at least medium-term revenue”) to suffer, but he said, “I would be shocked if it went down to a point where we were no longer profitable.”

And even if bitcoin enters a bear market, that fresh round of $420 million gives FTX “a pretty decent firewall of money.” And that firewall could soon become even more “decent”; recent reports indicate that FTX is looking to raise $1.5 billion at a potential valuation of $32 billion.

The son of Stanford Law School professors, Bankman-Fried is a longtime follower of “effective altruism.” That is, trying to make as much money as possible so that he can then donate funds in a way that optimizes their impact. In 2020, he performed a rough calculus and determined that his money could serve the greatest good with one simple function: to boot Donald Trump from the White House. His $5 million donation to the Joe Biden campaign – he’s one of the largest donors – is unusual in the libertarian-heavy world of crypto.

“I have given to some Republicans, I’ve given to some Democrats,” Bankman-Fried says diplomatically, then immediately clarifies that “I’ve given more to Democrats at this point.” He cares more about policy than party fealty.

Bankman-Fried seemed appalled, for example, by the Democrats’ proposed tax on billionaires, telling the New York Times’ DealBook, “I think this could cause hugely negative collateral damage, significantly reducing the amount of innovation and taxable base in the first place.”

As for 2024? “It’s hard for me to have a great prediction of that, without knowing who the candidates are going to end up being,” which, intentionally or not, is an almost hilarious low-key swipe at Biden.

Besides, 2024 is a lifetime away, especially in crypto years. By then, we’ll be celebrating New Year’s Eve in Midtown Manhattan at the FTX Times Square, we’ll buy our holiday gifts using the FTX cash app, and little kids will hope that Santa brings them gifts from the FTX North Pole.

That is all in play. The only safe bet is that Bankman-Fried still won’t have combed his hair.