Sam, the founder of a certain exchange, earned 25 billion dollars in four years.
He spent 5.2 million dollars to support Biden's rise to power and spent 5 billion dollars to make Trump give up his presidential campaign.
Unfortunately, his bankruptcy took only 10 days.
$8 billion of client funds went missing.
A month later, the total value of all cryptocurrencies evaporated by more than 2 trillion dollars.
The collapse of the exchange marked the end of the cryptocurrency boom.
1. Mathematics shapes the worldview
Samuel Bankman-Fried, born in 1992, is the fastest person to make money in history.
In four years, he earned 25 billion dollars, then spent 5.2 million dollars to support Biden's rise to power and 5 billion dollars to make Trump give up his presidential campaign.
Unfortunately, during those 10 days, his wealth turned into a negative 8 billion dollars.
A month later, he caused the entire industry to evaporate 2 trillion dollars.
At this time, he was not yet 30 years old.
Seeing this, you must guess that this person is definitely involved in cryptocurrency.
Interestingly, this most dazzling big shot in the crypto circle once claimed that he knew nothing about cryptocurrency.
Samuel Bankman-Fried's English name abbreviation is SBF.
His company's bankruptcy led to 8 billion dollars of client funds vanishing.
I estimate that among the clients who are at a loss, those who speak Chinese would affectionately call him SB.
English-speaking clients are more willing to call him f***.
Everyone calls him Sam or SBF, but I don't want to sound like I'm insulting someone all the time, so we'll just call him Sam from now on.
Sam was born on March 6, 1992, both parents are renowned law professors at Stanford, a prestigious university in the United States, and he was considered gifted from a young age, especially fond of mathematics.
It is mathematics that shapes Sam's worldview.
In middle school, he debated with his English teacher, arguing why Shakespeare could not possibly be the greatest writer of all time.
The reasoning process is as follows: when Shakespeare was born, the whole of Europe was basically made up of farmers, and the literate population probably didn't exceed 10 million.
And today, the global literate population exceeds 7.2 billion people.
Therefore, the greatest writer in history, born in 1564, is a very small probability event.
As a math genius, Sam's explanation is different from my simple explanation; he claims to use Bayesian priors to demonstrate this.
Growing up, Sam studied physics at MIT, and in 2014, he joined a financial company.
This is not a traditional Wall Street company, but rather those high-frequency trading companies that were rising during those years.
In such algorithm-driven trading, a millisecond advantage could be worth billions of dollars.
This speed cannot generate any real value, but it can bring huge stable profits.
In 2014, the company Sam joined reported that in 1,238 days of trading, only one day was a loss.
Of course, the algorithm is responsible for collecting and calculating information, but which information is profitable still needs human judgment.
In the new experiences on Wall Street, there are many magical logical connections.
For example, in June 2014, the World Cup was held in Brazil, and four months later, the presidential election would take place.
Financial companies took advantage of this to make a fortune.
Of course, they are not betting.
But it was found that every time the Brazilian soccer team won a match, Brazilians were happy with the status quo, and being happy would increase the chances of the current president Dilma Rousseff being re-elected.
The Brazilian market is very distrustful of the corrupt President Rousseff, so the stock market would crash.
This way, even knowing the results of the game a few milliseconds in advance can lead to a big profit in the stock market.
This wonderful correlation certainly does not only happen in Brazil; it was similarly so in the United States in 2016.
At that time, not only the United States, but global stock markets would fluctuate due to the election prospects of Trump.
For high-frequency trading, volatility is an opportunity to make money.
And the team led by Sam discovered that there was no particularly immediate dynamic release system for the US presidential election.
Financial markets learn about this just like ordinary people do, by watching TV news.
Sam described that the news anchor took fifteen seconds to walk to the map indicating the election battle.
Every step he took could result in transactions worth billions of dollars.
So Sam built a model and sent a large number of people to polling stations.
They obtain voting data faster than others.
On the night of November 8, 2016, the night of the US election.
The effect is very obvious; when Trump has good news, the stock market falls; when Hillary has good news, the stock market rises.
The company would buy or sell stocks in the US and emerging markets.
By the end of this day, Sam's team had made over 10 billion dollars in transactions in the stock market.
Because in the end, Trump was elected, the company determined that the stock market would crash, and they shorted a large amount of stock.
The team estimated that on this day, they earned at least 300 million dollars in net profit.
So Sam happily went to sleep for three hours.
But he underestimated the faith in capital markets; since he couldn't resist, he just closed his eyes and enjoyed it.
In those three hours, the market changed from resistant to welcoming.
When Sam returned to the company, he found that 300 million dollars in profit had turned into 300 million dollars in losses.
The most profitable trade in the company's history turned into the most unprofitable trade.
Sam is a supporter of the Democratic Party, and he will also have various super entanglements with American politics, but that's a story for later, we'll talk about it in a bit.
Because he needed a lot of money for his close connections with Biden and Trump.
He doesn't have much money now.
2. The wealth storm is coming
In 2017, Sam resigned from the company and started his own business.
Sam became the cover story of Fortune magazine.
This year's trend is obviously cryptocurrency.
In 2017, the total value of all cryptocurrencies in the world skyrocketed from 15 billion dollars to 760 billion dollars.
About 1 billion dollars worth of cryptocurrency is traded every day.
By the end of 2018, there were 2,177 different tokens in circulation.
As high as Bitcoin, with a market value of 60 billion dollars, and as low as a SHADE coin, with a total value of 20 dollars.
There is also Sexcoin, which claims to mainly facilitate the purchase of adult products.
Another type of PUTinCoin is to pay tribute to the "Russian people and their president."
But Wall Street was still watching; no one was high-frequency trading cryptocurrencies.
Although Sam knew nothing about cryptocurrency and he himself said that he did not understand it well until bankruptcy.
But that doesn't stop Sam from feeling that he discovered this opportunity.
So he started doing it, and at the end of December 2017, Sam founded a new company called Alameda Research, specifically for high-frequency trading of cryptocurrencies.
His prediction was correct; in 2018, this newly established company with only a dozen employees made over 30 million dollars in profits.
But earning so little in a year is really too slow.
Sam was not satisfied; he discovered that in this new way of playing, even the most astute traders would not be at the top.
Building a cryptocurrency exchange by yourself and issuing your own tokens on the trading platform is the real way to make big money.
In May 2018, Sam's exchange began operations, which later became the famous xxx exchange.
Soon, he issued his own token called FTT.
FTT is not a serious cryptocurrency; it's somewhat like the stock of xxx exchange but without complete equity.
Many people compare it to shopping points in a mall.
But this token was quickly speculated and its value increased dozens of times in a few months.
At this point, the door to Sam's wealth was officially opened.
In 2018, the daily trading volume of global stocks was 600 billion dollars, while the daily trading volume of cryptocurrencies was 200 billion dollars.
In 18 months, from nothing to becoming the fifth largest cryptocurrency exchange in the world.
From the summer of 2020 to the spring of 2021, through four rounds of financing, about 150 venture capital firms bought about 6% of the company’s shares for 2.3 billion dollars.
They could only receive dividends, had no board seats, and no control.
So in 2022, after more than four years of entrepreneurship, the under-30 Sam had assets valued at over 25 billion dollars.
We can calculate that earning 6.2 billion dollars a year, or 17 million dollars a day, translates to an income of 120 million RMB per day.
He also completely controls the exchange, as well as the previous quantitative trading company, Alameda Research, all capital operations.
Market value exceeded 80 billion dollars.
Forbes magazine exclaimed that the speed at which this man makes money can only be compared to Zuckerberg when he founded Facebook.
Also in 2022, Sam told reporters in an interview that at one point, according to the market price of cryptocurrency at that time, his total assets reached 100 billion dollars.
Naturally, Sam became the world's top cryptocurrency hero.
Young, unkempt, with a signature messy hairstyle, he has publicly claimed to be an altruist countless times.
He said his ultimate goal is to earn enough money, and then donate most of it to prevent pandemics and stop runaway artificial intelligence from destroying humanity.
Taking January 22, 2022, as an example, his typical day was like this: having breakfast in Los Angeles with the company's spokesperson Shaquille O'Neal, and then discussing investment with a prime minister from an Eastern European country in Washington.
Dinner in New York with the CEO of Goldman Sachs, he seriously considered acquiring Goldman Sachs.
At night, he returned to Los Angeles and was invited to a party.
Casual Sam went wearing big shorts and a T-shirt.
In his backyard lawn, he met Hillary Clinton, Leonardo DiCaprio, Orlando Bloom, Jeff Bezos, at least four Kardashians, and at least 60 other celebrities.
Everyone expressed their desire to better understand Sam's company.
In fact, this requirement is impossible to fulfill.
Because even Sam himself didn't understand his own company.
The two companies under his name basically have no clear financial statements and have never held a board meeting.
Even the most basic organizational structure does not exist.
In the company, the only organizational chart was something the company psychologist inferred.
Because psychologists believe that the mental state of employees is related to who they report to.
The main feature of the company’s organizational structure is that reporting is done at will.
According to psychologists, 24 people directly report to Sam.
These people do not include the chief financial officer, chief risk officer, or human resources director.
Because the company does not have these positions.
There is a chief technology officer, and in an ordinary cryptocurrency-related company, there would be a group of programmers reporting to the chief technology officer.
But at xxx, no one reports to the chief technology officer.
Because he has a bad reputation.
Another person had neither company shares nor a salary from the company.
But for some reason, he was responsible for all international business, with 27 employees reporting to him.
There are many such things; this place feels more like a student club than a company.
But despite this, Sam still stood at the top of the business level in various aspects.
In February of that year, he gave a virtual speech at the Economic Club of New York.
In the previous 115 years, those qualified to speak at this club were kings, prime ministers, and presidents from various countries, Jeff Bezos of Amazon, Jamie Dimon of JPMorgan, and central bank governors, CEOs of large companies, etc.
These speeches will have a significant impact on the market afterward.
When this 29-year-old king of cryptocurrency leaned back in a gaming chair and spoke via Zoom.
A reporter was allowed to sit behind him and observe.
The reporter said he would never forget this event in his life.
The reporter was impressed; it had nothing to do with Sam's speech content.
But during the Q&A session at the end of the speech, Sam answered questions while opening a video game, choosing a hero character, and then starting to fight.
"I expect the US economy to experience significant growth."
While Sam released a magical moment of a hero, he sincerely answered a question from the boss of a listed company.
3. How cryptocurrency tycoons spend money
As a successful person, Sam makes money quickly and spends it quickly too.
To be fair, it seems he doesn't spend much on himself.
He spends most of the day working, and at night sometimes sleeps on a bean bag in the office.
At other times, he would return to the apartment, or what he called a dormitory, where he lived with ten other colleagues.
Sam's dormitory in the Bahamas
Of course, this apartment is 500 square meters and worth 30 million dollars.
A former colleague described, "This won't affect his lifestyle because he has no lifestyle."
But Sam is definitely not a frugal person.
In September 2021, Sam moved the company to the Bahamas, buying a 20,000 square meter piece of land to build a new company headquarters.
The architectural designer had never met Sam, but he received a document supposedly outlining Sam's requests.
One is to look from above, the whole building must be F-shaped, and the other is from a distance on the ground, the building must look like Sam's fluffy hair.
Third, a huge atrium must be designed to hold a tungsten cube.
For some reason, dense metals like tungsten are particularly popular in the cryptocurrency circle.
Months later, at the acceptance ceremony, the architect finally met Sam, and he asked if these were Sam's ideas.
Sam knew nothing about this; he told the architect that his only request for the building was to have a badminton court.
And for the unknown requirements above, the building cost a total of 300 million dollars.
Of course, 300 million dollars is just pocket change; most of the money is used for investment and marketing.
In three years, Sam spent 5 billion dollars on 300 investment portfolios.
The money was spent very casually, investing hundreds of millions, with an average decision-making time of three days.
When Musk acquired Twitter, Sam also bought 100 million dollars worth of Twitter stock, and then he realized he couldn't compete with Musk, and this 100 million dollars was completely forgotten.
Another part of the money was spent on FTX's marketing promotions; the company spent a lot of money on American basketball, baseball, and football, hiring a bunch of celebrity endorsements.
In 2022, during the Super Bowl in the United States, Sam aired an advertisement that cost about 20 million dollars to produce.
This is probably one of the most expensive advertisements in the history of American advertising.
As a big businessman in the United States, Sam wouldn't miss the political game.
These days I'm preparing for the upcoming layout!!!
It's pretty easy to double your money,
At the same time, I'm also preparing to find some potential coins to hold until the end of the year,
Comment 888 to get on board!!!
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