May 26, 2022 - 6:09pm

Ever since Sam Bankman-Fried, the CEO of crypto exchange FTX, left Wall Street back in 2018, he’s been doing the rounds in the media, spreading a philanthropic message. Via effective altruism — a philosophy focused on “pursuing a lucrative career to have more money to give away,” as Intelligencer described it — Bankman-Fried wants to change the world. Now, as the head honcho of crypto’s biggest derivatives casino, he’s amassed a net worth of $22 billion, a more-than-enough sum to make a significant global impact.

But for better or worse? Before founding FTX, Bankman-Fried worked for trading behemoth Jane Street Capital, during which he donated 50% of his salary to pro-animal welfare organisations. 

Yet after starting his own enterprise, Bankman-Fried started earning more — and giving less. After amassing a multi-billion dollar fortune through FTX, his company’s foundation pledged to share some of its profits with charitable causes. The amount? A paltry 1% of revenues from trading fees, slightly less than the company’s own user donations.

It’s hard to square Bankman-Fried’s desire to create a better world through philanthropy while also running a crypto ‘exchange’, a euphemism for what is, at best, a new-age brokerage firm and, at worst, an unregulated casino. In both cases, most users will be losing money, and if the cynics have it right, underage gamblers can easily join them. 

But this isn’t to say that Bankman-Fried has stopped giving his money away. Only now, it is to political candidates, not charities. Earlier this week, the crypto CEO announced that he was pledging up to $1 billion to “influence the 2024 United States presidential election,” by “cutting across the partisan divide” as well as “promoting freedom and preserving democracy.” 

That crypto billionaires are starting to get involved in politics is unsurprising. Since the 2020 presidential election, the crypto industry has poured over $30million into campaigns with Democrats and Republicans alike coming out as defenders. But given how fraught with risk and fraud this industry is, we should be concerned about what the likes of Bankman-Fried are planning. ‘SBF’s wealth derives from a business model that is predicated on promoting dubious investment schemes and profiting from the trades. As the billionare himself indirectly conceded, it is basically one elaborate Ponzi scheme. 

For crypto holders, that’s an inconvenient truth, but for a member of the crypto elite who wants to become the next Bill Gates, this is especially problematic. Because if you’re in a Ponzi business, relying on a constant stream of new money coming in, how can you ever be expected to give most of it away?

Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at@concodanomics.