How Billionaire Sam Bankman-Fried Makes a Crypto Deal: In His Own Words – Fortune | Omd Cialis

Depending on who you ask, Sam Bankman-Fried is either crypto’s “white knight” — or a mercenary keen to make deals as the recent downturn puts many companies in distress. Perhaps unsurprisingly, the 30-year-old multi-billionaire who runs massive crypto exchange FTX sees himself as the former.

Bankman-Fried, widely known as SBF, admits he first got into crypto to make big bucks. But in assets In his latest cover feature, he says his main motive – especially lately – is also to contribute to the greater good. “I want to be in a position where we’re a little more generous in working with people than we actually have,” he said.

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

“There are a couple of things that come with that,” SBF said.

Crypto kingpin investment strategy breakdown

When algorithmic stablecoin Terra imploded in May, it triggered a domino effect that hit everyday investors as well as the biggest players in the industry. By the summer, the industry was reeling from a market crash so bad even Bankman-Fried “didn’t suspect” it.

Faced with the difficulties facing cryptocurrency investors – their life savings are stuck on platforms with little hope of return – and the future of the industry in question, Bankman-Fried decided to step in. Investing directly or through FTX or Alameda Research (a trading business he founded) SBF has offered lifelines to a range of struggling crypto companies, from broker Voyager Digital to lender BlockFi.

When evaluating a potential investment – or bailout – SBF first asks itself, “Is there a way for us to secure client assets?”

When he looks at a “potentially vulnerable business,” he looks to see if their “vulnerable” customer assets could be secured, he said. “BlockFi is an example where the answer was just ‘yes’.” But why?

Although BlockFi didn’t have “a ton of capital” on its balance sheet prior to the crash, SBF said, “they were otherwise a pretty healthy company. They had real business relationships with some places that were failing but had real risk management and their losses were minimal [post-crash] because of this.”

BlockFi wanted more capital as a buffer for customer assets amid the market downturn, according to SBF, but is otherwise a “healthy business,” he said. This health determines for him whether he can backstop or not.

Next, SBF considers whether supporting a company would “stop the spread of the contagion… You know, if one place blows up, can that cause more places to blow up? Are we going to see a chain reaction?” If so, there is overall value in trying to stop this, he explained.

Finally, SBF asks: “Is there a good deal for us here? Or more specifically, is there a “not bad” deal for us here? The mandate here wasn’t to try and make amazing acquisitions. The mandate here was to do business that is somehow reasonable, maybe even a little bit bad, but not terrible.”

He adds that just because FTX has a healthy balance sheet, “we can’t afford it all for stupid shit.”

While it’s nice to try to help many companies in need, SBF explains that sometimes it’s healthy to let certain projects die. By not doing this, “you’re trying to revive the thing that shouldn’t have been there in the first place,” he said.

The “bigger part of it” — something SBF “underestimated when I first got into the business” — is trust between business partners. “Lack of trust is a huge transaction price.”

“I don’t want to have to worry when I make a deal that the other side will try to fuck me 20 ways I’m not expecting. Because if that’s true, it just becomes impossible to make the deal, doesn’t it?”

His standard is simple: “We’re just not going to try to fuck you. We’ll try to be reasonable. We’ll try to be generous when we can. Let’s just try to work sensibly together and look at things from what’s good for the sum of us, and then we can think about dividing the pie.”

To learn more about SBF’s views on closing deals as well as his thoughts on Bitcoin’s future price, be sure to read the full article wealth Conversation.

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