Sam Bankman-Fried

So is crypto down for the count or is it coming back? I think it's coming back. And obviously a lot of this is just going to have to the macro environment. You know, if we see markets crash again, we're going to see crypto crash along with it. If we see a market recovery, we're going to see a crypto recovery along with it. But I think this is, you know, it's flushed out a lot of the things that needed to be flushed out from the crypto space anyway. Right when the when May of this began, I think

a meltdown in tech values and also crypto. Did you get nervous that all of a sudden the world was going to fall apart. Not super nervous, It's like it was definitely gonna be a rocky road for the industry. And you know, you saw some businesses blow up when

bitcoin hit twenty k. Um. I think you know, if we saw things meltdown much further than they did, right, if we saw you know, nazac trop from here in bitcoin go down to ten k per token, I think you would see another round of pain for the industry that would potentially be more of a medium to long term problem. So it didn't give you any gray hair I can see, so oh well a little bit, but you know I plucked those out to keep up appearances. Um.

So let me ask you this. When the bitcoin world was kind of going down a bit, I think a bitcoin peaked at sixty one or something. Now it's at as low as when I did. Um, a lot of other cryptocurrencies went down as well. Um, you bailed out some companies. What money did you use to do that?

So there there are a few different versions of it, and um, you know, one piece of this was basically FTX balance sheet, like we keep our corporate cash just in dollars and so you know, we've raised a few billion dollars over the course of the last last couple

of years and we're profitable business. Um. Now we we've also done some acquisitions which partially balances that out, but you know, we had some some cash left and with the Block five you know deal for instance, UM that was on f I think f x USS balance sheet. Well on Wall Street has had its problems early in the twentieth century, um shape Mr JP Morgan himself. Yeah, I used to go out and say I'm going to bail out certain companies and you were called the JP

Morgan crypto. Does that bother you or not? It doesn't bother me too much. I mean think it's something I thought was the right thing for the industry. And you know, are very explicit mandate that we sort of gave to the team of people working on this was your goal is not to make a fortune for us doing this, like your goal is to do okay deals. Your goals

for us to knock get our faces ripped off. But contingent on that, you know, do as much as we can to bail out the industry, and that that was the higher goal, was trying to backstop places rather than maximizing on on these deals. No, I would have loved other people to do it, Like I think I've been great. So you went in, you bought some companies where those investments profitable. I mixed is basically the answer. I think some are going to turn out to be profitable, some

won't be, like one of them, certainly. I mean with Voyager, I think, you know, there's seventy million dollars there that that that we put in that I'm not sure ever seeing that seventy million again. And so you know, we actually make snap judgment calls, and we made them such that if things turned out well, they'd be good investments, and if they turned out badly, they'd be bad investments. But we sort of limited the amount that we could lose from it. Why if so many young people seem

so attracted to crypto. I mean, I know the people from all over the world, of all ages, but it seems like young people particularly are very interested. Why is that? Yeah, I mean, partially, it's a new thing that's going to appeal to younger people. But I think another aspect of this is if you're you know, twenty one years old and you're trying to get access to markets you want to be able to to train aid to invest. You can sign up for an account on the Crypto Exchange

and get full market access. If you try and get that same level access in equities and commodities, you can't get it. You're gonna end up with heavily intermediated access that has like pretty limited amounts of real interactiveness, limited amounts of liquidity, limited amounts of size, limited amounts of market data. And so I think for a you know, natively digital generation that's looking to take more control of their finances actually being able to do it with crypto.

It is a big, big difference. So in your own case, you got involved with crypto at what age I was, boy, I guess there's twenty five or so. And did you ever imagine that at when you got involved you would now be one of the most important people in the crypto world. I have become a multi billionaire. No. Well no, although the crypto worlds also grown quite a bit since I got involved. But I was surprised at how big, how how big things you're in general, how big you know,

I was able to grow things. I thought there was a chance of it, like I did see pretty high upside. When I got involved, I was surprised that we actually got there. So today you're running ft actually start ft X in what year? And what does it actually do? So it's a encryptocurrency exchanges is what we call it. But really it's a combination of a few different businesses.

If you compare it to traditional finance, right, you have you know, the New York Stock Exchange, y nastact, ice and C and me as the exchanges and that that's where bids and offers cross. But you don't go to New York Stock Exchange dot com to send an order there. They are primarily the sort of back end trading infrastructure.

Separately have brokerages, fcms and other businesses that sat in the front that you know, consumers access, and then you have different settlement and sort of custody parties sitting in the middle. There in crypto, all of that gets squashed traditionally into one entity. And so what what FTX is it's sort of all of those things. It's a back

end you know, match engine, risk engine, custody system. It's a front end mobile app, website, API and everything in between, so that you know, if you want to buy or sell a bit cooin. You can go to ft x dot com and you know, we offer all the services necessary to do that except for buying and selling. So you got involved because you thought it would be in a creative new area to to get involved with. But was making a lot of money at one of your goals? Yeah?

It was. And in particular, when I was in college, I started went to a lot of charities that I really respected and said, Hey, what can I do to help you guys out, Like, do you want me to work for you? And they basically not really. I mean you could, but they'd be kind of mediocre. Um. You know what they say is they they'd rather my money than than my time. And so I ended up going on to Wall Street and then getting involved, you know, with crypto, with the goal of donating what I made.

So let's go back to your youth. Not that you're old, now you're how old? Thirty years old? Thirty years old? So let's go back to let's say when you were growing up. You grew up in California on Stanford campus, and your parents were both professors at Stanford Law School. Yeah, and one's name was Professor Freed and one is professor Bankman. So whose idea was it to combine the two into one name. I think they kind of both had the idea. I think there's a little bit hashing out of exactly

what that would look like. Would it be Bankman freed? Would I be free bankman um? But I think they kind of mutually came to that decision. So if you got married someday and you yeah, so you'd have two hyphens, right, well, especially if if I'm married someone with a hyphenated last name, right then you've got four names. I think at that point we just have to roll a die and choose one. Oh wow, Okay, so you've thought about that. Yeah, I mean you can also just choose a totally new name.

But would it be particularly attracted to find somebody had a hyphenated name or not? Really? Oh, I think it would be. It would be worth one good story. That's why I get out of it. On the scale if life partner is not the most important criteria. Okay, So you're growing up, your parents are distinguished professors at Stanford Law School. Were you interested in the law at any

point or not not at all? Growing up? I think I'd become more interested in it recently, but you know, and when it's growing up, my parents told me you can do whatever you want with your life. We don't particularly recommend that you become a lawyer, but you know, you're welcome to do whatever you want. So we were a bit of a math prodigy when you were younger. I was certainly better at math than I was at at a reading or literature. So you went to M

I T. Yep. And when you got there, did you find that people were smarter than your thought or not as smart as you thought? I think smarter than I thought. I think maybe some part of me had hoped that I would, you know, be able to live a life where I, you know, was always clearly sort of like you know, uh, an outlier on that, And I think M I T. Taught me that wasn't true. That there were a lot of other really smart people in the world, um, and you know, was really interesting and cool getting to

know them. So when you get the M I T. Did just say, Look, I'm going to go out and become a multi billionaire before I'm thirty. No, I had no idea what was gonna do. I mean, I I weekly thought I was going to become a professor, not for any particular reason. I realized I didn't really like academia when I was there, and that left me kind of a little bit lost about what I would actually do with my life. So what did you major in physics? Technically?

I I took about the bare minimum that you could imagine. It took maybe seven or eight physics classes my whole time there. So what did you really take courses in math? Or I took some my minor in math, but I took a kind of popourri of classes, um, you know, some policy classes, some econ, some psychology, But really I also didn't take that many classes and and sort of got a little burnt out of academia. And so when you graduated, what did your parents say you're to you

about what you should do upon graduation. I mean mostly they said a should do what I wanted, and what, like I thought was whatever I thought would be exciting, and you know, they're going to support me with whatever. But I, you know, going to like junior year of college, I had no idea what that was going to be. Always sort of had just ruled out or soft ruled out academia and didn't know what was going to replace it.

I ended up interning at Jane Street, a finance firm, after my junior year, and I really liked it there and was starting to chart a path forward of donating money. Okay, so did you do upon graduation? You took a job in finance? Yep, went back to Jane Street work there full time. And what did they do? They're quant trading firms. So I was on the internationally t F desk. Basically that means you have a US listed fund that owns

a lot of foreign stocks. So you know, you could look at e m U S listed ETF that owns a bunch of emerging market companies, um, you know across uh Asia, across lot M, and you know a few places in Europe. And it's basically a combination of like modeling, computer trading, and real time intuition kind of jumbled together. And how many years were you doing that? About three three and a half years, all right? Then after that you said I'm going to go start something in the

crypto world. Not quite so I left in late in Let's says fall, roughly, not sure what it was actually going to do next. What I'd really done was sort of written down like twelve things I could do with my life, and I felt like a lot of them were compelling, and I didn't know what was going to be best, but that you know, the only way to try would be to to to leave and just dive into some of them. And so you started your own company.

What was it called? So Alameda Research is the first company started up, and it was a crypto quand trading firm. And you know the sort of founding if it was basically well, you know, bitcoin was trading on a lot of different crypto exchanges and it was not trading at

the same price on all of them. So you might see it training for ten dollars on coin base and ten tho on bit stamp, and you know, in theory there's a one percent arbitrage to do their trading those against each other, all right, So she decided to mirror less trade bitcoin or other cryptos and take some arbitrage advantage. And it was a profit of white presume, Yep, it was. It was a huge amount of logistical work, like finding

the trades was the easy part. The hard part was getting the account sending wire transfer, was opening up entities and all of the other sort of operational work that went into actually being able to execute normally. Then people start companies, they get venture capital money, and those venture capital's own a piece of it. Did you get venture capital money? Not for Alameda? And part of this was, you know, we talked with some VC firms and our

petrits basically, hey guys, good news. A bunch of twenty five year old UM, we don't really know what a big poin is, but we're trading it. Also, this is all crypto um and uh, you know, we got a startup together. None of us has run a company before, and we'd like a hundred million dollars by next Tuesday. Ideally. It was not a very compelling pitch turned down. Oh yeah, I mean no one. You know people are like, oh that's so cool, like I hope you find success, and

you know, no one was. And it's what we ended up doing is basically cobbling together lines of credit and other things from various sources, trying to sort of snowball and be able to to to build on ourselves. Okay, so after that, you've started another company, f t X. Yeah, Now what is ft X do that your first company didn't do? So Alameda is buying and selling like it's trading for its own book and you know, trying to to do profitable trades. F t X you can think

of it as infrastructure. It's markets infrastructure, so everything that sits between a buyer and a seller. So ft X doesn't buy in cell itself. Um, but it's a venue where people can go to trade crypto and and you know that that aims to solve sort of every piece in between those two parties from you know, the clearing and settlement and custody, the you know, anti money laundering. You know, your customer policy is the compliance uh you know, the match engine, the risk engine, the front end and

everything else. Right, So why does somebody come to ft X and use you as opposed to one of the other uh similar exchanges. Yeah, I mean, you know, to each his own. But the things that I think we've particularly specialized and been good at one, we've been pretty you know, fast moving and innovative, you know, where a relatively new venue. But we've put a lot of thought into exactly how our products are designed. Where's the company based. So we have we have a lot of offices for

regulatory reasons. So as an example, we have a new Tokyo office with a bunch of people in it because we now have a jfs A Type one financial services license there. So we have like little bases in a number of the Jersey dictions that we are licensed and regulated in. But our biggest offices in the United States, in Chicago and outside the United States is NASA on the Bahamas, Right, So you live in NASA and is that a tough place to live? It's it's really tough.

It's a hard life. And so how do you put up with the pleasure of going to the beach or not versus working? I'm uh, you know, for better or for worse, not the person most tempted in the world to go to the beach. I enjoy it being there. I like going there once every couple of months, but I don't I don't spend a lot of time outside. I'm pretty much just in the office. So you don't look like you have a tan or anything. No, not

so much. So what is your interest in philanthropy? You're one of the youngest people to sign the Giving Pledge you were at the most recent meeting. What propelled you to do that? It's always been in theory of goal of mine to figure out how it can have positive impact on the world, and how it can have the biggest possible impact, not just you know, some some random

amount of it. I didn't actually put that into action for a little while, but when I got to college, I sort of came to terms with the fact that there were really things that I could do that would have impact, that it was worth doing those, and then started to think more critically about what should I do with my life that would be the best for the world, Like, what what would maximize that? What is effective altruism, which

is something you have pursued. Yeah, so the effect of altruist community is the community people doing basically that, looking at, you know, how can you maximize your positive impact on the world? What should you actually do with your life? And it looks at it both from the lens of like, you know, should you be you know, earning TV, which is say, making money with the goal of donating it to effective causes? Um. Also you know, it looks at, you know, should you be working directly for some of

these foundations. In addition to that side, it also looks at, you know, what causes are the most impactful? Right? Should you be thinking about global poverty, about you know, animal welfare, about climate change, about pandemics, like what are the areas that are most impactful, you know, to focus on. And I got involved in the community in college and it's been a really big part of how I've decided what to do with my life. What do you hope your

impact society is. I mean, in the end, obviously there's an impact from the day to day work. UM hoping to make financial markets more efficient, more inclusive, you know, from what I do with my donations. We'll see in the end, but you know, right now, I think I would say biggest things like getting the world to a place where we're actually ready for the next pandemic, even if it's nasty, even if it's bioengineered, that we can shrug it off the way we failed to shrug off

covid UM would be one of the primary goals. And I think, you know, helping DC become more constructive UM is a big goal. So very often when people get wealthy, they buy fancy suits and so forth. You haven't gone to that phase yet, right, Not so much. Your outfit is pretty much standard. It's some kind of T shirt, shorts, tennis shoes. Is that what you wear all the time When I go to Washington, d C. I have a suit there because I have to wear it on the hill.

But outside of that, Yeah, So you're thinking of buying a house to live in or where do you live? So? I live in uh, the nine nine colleagues and I bought a large apartment together near office that that that that we live in. UM and I don't. I mean, you know, I'm sort of really fortunate to be able to have a really comfortable life and not have to worry ever about, you know, money for myself. But I'm not particularly excited, you know, to to to dive into luxury.

I'm not excited about yachts. UM and I both think it's not what I should do with my money. I think I should be thinking about how I can help the world with it. And also just isn't who I am. So do you go to Washington much to lobby with members of Congress and or regulators? And is an uplifting experience for you? It's so, I I go a lot. I'm there probably every few weeks, and it's been a

surprisingly uplifting experience. I was not expecting that I was expecting it to be a real slog and I think it could have been in a slightly different universe where you saw continued wards going on between regulators and the industry. What we've tried really hard to do over the last year is to get the industry to a place where

it is happy to accept sensible regulation. And I think that's that's helped turn down the volume a little bit on the arguments and due to a place where most people are honestly trying to engage on what's the important federal oversight that we need to give to the industry. How can we do that in a way that makes sense given how the industry operates. The crypto industry seems to want to be regulated by the CFTC and some people want the SEC to be the principal regulator. UH,

do you have a view on this? So in the end, both are going to be regulators. And you know, the CFTC is going to regulate commodity future, so it's going to regulate very likely futures on tokens that are not securities. The SEC is very likely going to end up regulating UH spot UH security token markets. And there's some territory in between there. When you look at spot commodity markets, when you look at what security token futures regime might look like, those may end up as joint regimes. They

may end up in one place or the other. In principle, I'm fine with either regulator or any combination of them. You know, I think that the non security token aspect of this is a nice fit for the CFTC's regime now in our country, when you want to have some influence with government, very often people make campaign contributions as they're called, and you've become a large donor to political candidates.

Is it because you want some influence on the policy of crypto or is it issue I think these candidates are good public servants. It's mostly just looking for good public servants like that is by far the most important thing to me. And look, there are a lot of issues that matter, but there's also just this correlated aspect of like are they going to be fighting too what

they think is right for the country in general? And you know, the single issue that I have sort of spent the most time, uh you know, thinking about the most money, uh you know, donate to on the political side is pandemic prevention. Which has nothing to do with crypto. Um, but it's you know, ultimately, what I think is, you know, one of the most important issues for the world over next, So how do you find political fundraisers? They come to

you directly? Is it easy to get to you and say we need this money for this candidate and what type of candidates you tend to support? Oh? Yeah, well if you if I pulled out my phone here and just looked at my last ten text messages, you know about half of them are going to be people asking for you know, politicians asking for for contributions. But um, you have a political expert advisor. Yeah, so obviously ignore

the text messages. Um, I've i've I've got a few people on the ground in DC whore sort of actually running the operation stage. So when you give money to a candidate and he or she gets elected, do they respond to you when you call them later or not? Really? Some do, some don't, And it's you know, always super happy to talk, but it's not generally the primary goal, Like, the primary goal is generally that I thought they would be a good legislator. Do you get involved with presidential campaigns?

You're gonna be involved in this campaign that's coming up in a couple of years. It's a good question. The answers. Maybe it totally depends on who's running, on what the race looks like. I'll give a couple of thoughts. The first is, you know, I might be very involved, I might not be involved at all. I might be involved on either side or both. And in general, my senses that primaries are really important, and I think this is

true for the presidency as well. I think this is something a lot of people miss is that if your goal is partisan, then you basically have to operate in general elections. That's when you know partisan splits are determined. But if your goal is getting like good public servants and people who are really fighting forth right for the country, there are people who do don't fit that description on

both sides of the aisle. And you know, you have these contests which are wing lower stakes from a partisan perspective. It gets rid of a lot of the noise and competition, and you know there are great opportunities to support people who just be good public servants. So you support people

of both parties. Yeah, okay, and today you would not consider running for office yourself, right, I would be an insane thing for me to do as a fourth job to tack onto you know, the other things I'm doing, And can you see doing this for another ten years, twenty years, thirty years like this? I think. So I don't tend. I mean, when I get burnt out, I get burnt out because I'm out of useful things to do on a topic. I don't tend to get burnt

out from workers stress. Crypto came along relatively recently. I guess bitcoin is invented in two thousand nine, but yep, but relatively recently it's become a big phenomena. Do you see any other phenomenon like that that you might get involved with as well? Potentially? I mean, look, eventually AI, I think, you know, right now we're at the stage of AI being mediocre chat bots instead of really bad

chat box. But that's going to change over time, and you know, mark to ten twenty years from now, we may be having a very different conversation. So I I have not bought any cryptocurrencies. I have invested in companies that service the industry, but I haven't bought crypto myself. Let's suppose I said I wanted to buy some cryptocurrencies

what would you recommend to me or anybody else. Well, first thing, as I try not to give an investment advice, and and you know, what I would say is the most effective and useful thing you can do is just try everything out. Take ten dollars, Feed it through every protocol, feed it through every exchange, see what it's like. Get a first endo experience of using a blockchain, using a blockchain explorer, doing trade, and that will teach you a

lot about how the industry functions. You know, I think I've I've been really interested in a few different areas of the space. I think have been interested in scalable blockchains, have been interested in obviously in the exchange and platform space,

especially on the regulated side. Um. And then I'm super excited about the potential for blockchain based social media to the extent that there are projects coming out, you know, in that area around remittances and payments and around market structure. Those are the places that I'm looking at the most right now. So, um, in the case of cryptocurrencies today, you say it's now the time to get in it's good, or now is the time to wait to see where

the market's going. So I think what I would say is there's potentially a lot of profit you can make, you could also lose. So like things can go up, things can go down. Um, there is you know a lot of upside potential. The biggest thing I would say is don't put in more than your you know, find losing like you know, don't don't put in money that you would be really really sad to lose into you know, crypto right now. Um, you know, think of it more

as an upside play. When you leave this interview and you go outside, can you walk down the streets of New York without anybody bothering you? It's borderline. So I think probably half a percenter or third of a percenter or something of people recognize me here, and so you know, the real answer is like every ten minutes that I'm walking on the streets, someone will recognize me. Roughly, it's a little bit in between. What you can do is get a comb, comb your hair, or get a shot

and then people would be your disguise. It's true, I could just look look normal and that would do You haven't thought of that, That's that's beyond me. Thanks for listening to hear more of my interviews. You can subscribe and download my podcast on Spotify, Apple, or wherever you listen