SBF's journey building FTX: Cryptocurrency is great, but exchanges are broken
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SBF's journey building FTX: Cryptocurrency is great, but exchanges are broken
SBF appeared on an NBA star's podcast: "I wanted to be a scholar as a kid; when I founded Alameda, I didn't understand Bitcoin at all."
Navigating Web3 tides with focused insightsFTX founder Sam Bankman-Fried (SBF) recently appeared on NBA star Andre Iguodala’s podcast Point Forward. Unlike previous interviews focused on markets, this conversation delved into SBF's background and journey—such as how he once thought he’d become an academic, and how Alameda Research began as a tiny two-person operation where he initially didn’t even understand Bitcoin.
Point Forward is the podcast hosted by Golden State Warriors player Andre Iguodala, covering topics across sports, business, and technology. Beyond being an athlete, Iguodala is also a well-known Silicon Valley investor focused on tech startups. His most famous investment was in video conferencing platform Zoom, which nearly doubled his net worth.
Iguodala also serves as a financial mentor to many NBA players, offering investment advice and organizing events like the Players Technology Summit to help athletes better understand the investment potential within the tech industry.
At the start of the episode, Iguodala mentioned that cryptocurrency has long been an area of interest for him, and that earlier this year he converted part of his salary into Bitcoin.
SBF: The Kid Who Thought He'd Be a Scholar
It's well known that SBF’s parents are both law professors at Stanford University, prompting Iguodala to wonder whether SBF had a different upbringing from other kids.
SBF said his parents never dictated how he should think. Instead, he observed how they and their colleagues discussed issues—ranging from politics to business. As he grew older, SBF began researching these topics himself via Wikipedia and blogs to form his own opinions.
When asked about pressure, SBF noted that his parents never pressured him. Rather, he put pressure on himself, feeling that since both his parents were law professors, he might need to become a lawyer or professor too.
One thing was certain: his parents’ values deeply influenced him:
"They never told me what to do or how to think, but I was exposed early on to legal thinking—how to reason, how to interpret politics.
But they always considered how to maximize their impact on the world around them. That idea has stayed with me—I’ve always kept it close."
Why MIT?
Next, Iguodala asked SBF why he chose the Massachusetts Institute of Technology (MIT).
SBF joked that he wasn’t entirely sure why either. Subconsciously, he may have assumed he’d become a physics or math professor one day, so MIT felt like a natural choice—not necessarily for any deep reason.
But once he actually attended MIT, he noticed distinct differences between its culture and that of other universities.
While top-tier universities generally attract highly ambitious students, MIT—as a research-driven, tech-focused institution—has a particularly strong “nerd” and “geek” culture, filled with academically driven, intellectually curious individuals who aren't always socially oriented. SBF found he fit right in.
[Note 1]: The terms "nerd" and "geek" here carry no negative connotation—they refer to intellectually curious individuals who focus deeply on their studies but may not prioritize socializing.
Your Money or Your Time?
During his time at MIT, SBF gradually developed his philosophy of “effective altruism.”
He explained that many people hold some version of effective altruist beliefs.
For instance, when choosing careers, most consider to some degree how their work might improve others’ lives—though only some place this as their top priority, aiming to maximize their positive impact.
"I started exploring effective altruism during my freshman year, which led me to reflect deeply on my future career path.
I realized I didn’t just want to ‘do good on the side’—I wanted making a meaningful impact to be my primary goal."
If you break “effective altruism” into “effective” and “altruism,” MIT strongly emphasizes the former, while altruism remains a niche value among a small group.
However, within global online communities, SBF found many others who shared his altruistic views, and it was through these external networks that he further explored the concept.
Through this network, SBF encountered the effective altruism nonprofit 80,000 Hours, where mentors suggested he consider pursuing a high-earning career to maximize donations.
He received similar advice from several charities.
"I asked charities whether they’d prefer my time or my money—and overwhelmingly, they said they’d take the money.
I could donate significantly more than I could contribute by helping build their organizations directly, especially since I wasn’t trained in those fields."
Didn’t Understand Bitcoin—But Saw Profit First
After leaving Wall Street, SBF was uncertain about his next steps, but decided to launch his own fund, Alameda Research, in early 2017—just in time for the first major crypto boom.
"Thanks to Bitcoin rising from $3,000 to $20,000, 2017 marked the first time mainstream attention turned to cryptocurrency. Everyone was talking about it—your friends, your family."
"For me, it was clear there would be strong demand in the crypto space, rapid industry changes, high trading volumes, and likely inefficiencies in the market."
At the time, there were no institutional liquidity providers and limited arbitrage mechanisms. Yet it was evident there would be massive trading volume and price volatility—ideal conditions for traders.
Still, SBF admitted he didn’t initially understand Bitcoin or blockchain technology.
"When I first traded crypto, they were just strings of numbers to me. I saw simple price differences between exchanges—one might list Bitcoin at $7,000, another at $7,200, giving a 3% arbitrage opportunity.
I just thought there might be profit to be made."
Became a Leader Only After Starting a Company
Today, FTX and Alameda Research each have distinct company cultures, and FTX’s rapid rise proves SBF is a capable leader. Iguodala asked how SBF achieved this.
SBF replied that he never expected this outcome.
"Starting Alameda was purely about trading—finding opportunities, executing trades, and making money. So Alameda really began as just a two-person company."
As he entered the crypto space, SBF realized the opportunities were vast, but trading was complex—requiring more staff and larger teams. At that point, leadership wasn’t on his mind.
"I didn’t realize I needed to 'lead' at first. I just saw opportunity. But because the work was complex, I had to hire people. I answered their questions, gave advice, helped them get started—and suddenly, I found myself acting more like a project lead than just an employer."
Even then, SBF didn’t view it as formal management or team culture—he simply wanted everyone to do the right thing. That became his early leadership philosophy.
Iguodala added context to SBF’s answer, noting that this stage revealed SBF’s thinking about the company’s core direction—a lesson he learned as an athlete, where a team leader’s philosophy and behavior shape the entire group.
SBF believes establishing a company philosophy is crucial.
"It’s not about writing a manifesto and declaring: ‘This is our mission.’ But you do need a philosophy. You must clearly tell people what’s right—rather than complaining later that employees made mistakes, saying, ‘I already told them.’"
Crypto Is Great—But Exchanges Are Terrible
After beginning to trade crypto, SBF realized why it gained traction. The real challenges weren’t related to trading itself, but rather ancillary issues like account setup and wire transfers.
On Wall Street, he simply clicked buy or sell—assuming that’s how all markets worked. But he soon learned that asset trading is actually a privilege.
Just like arbitrage across international exchanges isn’t accessible to everyone—it often requires connections or special access.
Crypto, however, is open to anyone—that’s its appeal.
Yet there’s a flip side: crypto exchanges are incredibly difficult to use.
"In 2018 and 2019, whenever prices swung too much, exchanges would crash under trading volume. Most exchanges lacked compliance departments and had no communication with regulators.
Using these platforms, you quickly realize exchanges are critical infrastructure in crypto—and their user experience is terrible."
Just as before, SBF saw an opportunity. An industry with billions in trading volume and global accessibility had key infrastructure—exchanges—with poor execution and UX. That’s what led to FTX.
"That’s exactly why I created FTX—to see if we could deliver a user experience on par with traditional finance, with smooth operations and clean interfaces, while preserving crypto’s innovation and market structure."
The Capital Markets Winter
Unsurprisingly, Iguodala brought up the current state of the crypto market.
SBF believes the downturn stems from a shift in monetary policy. For decades, loose monetary conditions drove asset prices upward. Traditional inflation indicators like CPI or PCE failed to fully capture real inflation.
This time, multiple factors combined—pandemic disruptions, the Russia-Ukraine war, supply chain issues—pushing inflation out of control.
The Federal Reserve responded with its largest rate hikes in nearly 30 years, triggering widespread panic in financial markets. It wasn’t just crypto that crashed—the Nasdaq also dropped over 30% from its peak.
The market collapse triggered massive liquidations and liquidity crises at firms like Celsius and Three Arrows Capital. SBF believes Bitcoin’s drop from $25,000 to $20,000 was largely due to forced liquidations.
However, SBF suggests the worst may be behind us. In the short term, crypto will remain tied to macroeconomic trends; in the long term, it depends on whether the industry can keep building great products.
"So the near-term trajectory of crypto depends on broader economic developments—interest rates, inflation, the Ukraine war. These are the short-term variables.
Long-term, it ultimately comes down to the development of the crypto industry—whether we continue creating valuable products. That’s the fundamental driver."
How to Balance Regulation and Decentralization?
Before discussing regulation, SBF believes the crypto industry can evolve along two paths: self-regulation and community education.
Self-regulation can provide users with greater transparency and accountability. Once crypto startups recognize that trust requires self-policing, scams will become far less common. Community education is equally important—both go hand in hand.
As for how regulators will respond, SBF doesn’t have a definitive answer. But he believes regulating the “front end”—platforms that serve retail investors or sell crypto products—is more feasible. These interfaces should be required to provide transparency, fair trading practices, and user protection.
But for backend operations, SBF advocates for openness.
He used modern international wire transfers as an example, where current regulations mostly apply to the back end.
A transfer might pass through three or four banks, each spending significant time verifying identities and destinations—often without clarity. This makes small cross-border payments inefficient compared to large ones.
Iguodala loved SBF’s analogy, calling it “sweet jazz.”
Finally, Iguodala asked why FTX partners with athletes and sports teams.
SBF replied that while many assume FTX does this to acquire more users, that’s not the reason. If user acquisition were the goal, he’d spend the money on Facebook or Google ads instead.
The real reason is brand-building.
He believes sports are one of the few truly borderless industries. Partnering with athletes and teams helps the public quickly recognize FTX and understand its core mission.
"Our biggest goal is to let people know who FTX is, what services we offer, and boost our visibility in the industry. We’re now focusing on building relationships and shaping public perception of the FTX brand.
From that perspective, sports is one of the few industries with massive reach that can help us communicate effectively with the broader public."
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