What made Sam Bankman-Fried launch FTX — and what he now thinks about the world (Part 1)

Episode 85 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and CEO Sam Bankman-Fried of FTX.

Listen below, and subscribe to The Scoop on AppleSpotifyGoogle PodcastsStitcher or wherever you listen to podcasts. Email feedback and revision requests to [email protected]

This episode is brought to you by our sponsors BakktKraken and Kava
Bakkt® unlocks the $1.2+ trillion of digital assets that is currently held in cryptocurrencies, rewards and loyalty points, gaming assets and merchant stored value. We began in 2018 with the vision to bring trust and transparency to digital assets. Through the Bakkt Warehouse and Bakkt Bitcoin Futures and Options contracts, we serve institutional clients in an end-to-end regulated market with true price transparency. For consumers, Bakkt aggregates digital assets to enable instant liquidity and to empower users to trade, transfer and pay however they want. Visit Bakkt.com for more information

About Kraken
Whether you’re an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With 50+ cryptocurrencies to choose from, industry-leading security and a wide variety of features to suit any investing strategy, Kraken puts the power in your hands to buy, sell and trade digital assets. Visit Kraken.com to get started today.

About Kava
For over four years, Kava Labs has contributed to building a portfolio of decentralized products and services that allow users to gain access to all of the benefits of DeFi. Kava connects the world’s largest cryptocurrencies, ecosystems, and financial applications on one of DeFi’s most trusted, scalable, and secure earning platforms. Kava lets you mint stablecoins, lend, borrow, earn and swap safely and efficiently across the world’s biggest crypto assets with a simple and intuitive user experience and the full confidence of institutional-grade security and quality. With a proven track record of delivering successful projects safely, the Kava Platform is DeFi’s most trusted, scalable, and secure institutional-grade cross-chain engine.

Sam Bankman-Fried, the billionaire founder of crypto exchange FTX, joins The Scoop to close out 2021 in a two-part episode that explores the origin story of the increasingly ubiquitous trading venue, Bankman-Fried's worldview, and what he expects for the digital asset market in the year to come.

We begin with Part 1, during which the former Jane Street trader and Stanford graduate harkens back to the precious beginnings of FTX, spun out of Alameda Research, a trading firm he also founded. 

Bankman-Fried also explained why the firm was launched in the first place back in 2019. 

“What it really was, was saying, OK here’s a business [that’s] making $1 billion-plus a year collectively at the time, which we understand deeply,” he said. “They were just not well built. The number of problems they had were enormous. Losing millions of dollars a day in customer funds ... the risk engines just didn’t work. And you could see why.”

As Bankman-Fried recalled, some back-of-envelope math played a role in the decision-making process. He said he considered what the expected value of an exchange could be and figured that the odds of success were non-trivial:

"I don’t know exactly how high, but definitely not close to zero, so fuck, it let’s do it. That was basically the chain of logic there. Eighty percent chance we fail to ever get a user. If we do get users then there is a 50% chance that it goes pretty well.”

During this episode, Bankman-Fried and Chaparro also explore:

  • FTX’s marketing campaigns and the underpinning ethos of its advertising strategy 
  • How memes differentiate FTX from its competitors
  • Why FTX wants to take a very different approach to public relations than most companies 
  • The regulatory environment in crypto and why Bankman-Fried doesn’t think the conversation is partisan.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Frank Chaparro covers the intersection of financial markets and cryptocurrency as Editor-at-Large. Since joining the publication in 2018 as its first reporter, he has played a key role in building The Block into a leader in financial journalism and research. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected]

More by Frank Chaparro