Fortune Interview with SBF: Discussing the Crypto Winter, the Direction of Crypto Development, and the Ultimate Goal of FTX

Written by: Jeff John Roberts, Fortune

Compiled by: Katie Gu, Odaily Planet Daily

Billionaire entrepreneur Sam Bankman-Fried (wealth estimated at $11.5 billion) has taken on a new identity: the white knight of the crypto space. Amid the "crypto winter" where Bitcoin and various assets are crashing, SBF is seizing the moment to buy time for his startup. On his way to New York, SBF gave an exclusive interview to Fortune magazine, discussing his investments, the future of cryptocurrency, and his ultimate goals with FTX.

The following interview excerpts have been edited for clarity.

Fortune: Did many people in the crypto industry foresee the current crypto winter? Do you think this could be detrimental to market development?

SBF: Certainly not everyone saw it coming. I think it's healthy. If you happened to tell me that the Nasdaq would drop 40% from its peak, I would guess the market would decline. Likely only a third of the trading (market decline) is due to crypto-specific issues. The other two-thirds are just because of the macro situation.

Fortune: The earlier crypto crashes in 2014 and 2018 have served as lessons for the market, and the rebounds have been stronger than ever. Will this time be the same?

SBF: I feel like we’ve seen the worst of it, with a bit of extra return. I think this is a beneficial "hunting expedition." It’s beneficial for individuals to rethink how they value assets, to be more grounded, and to understand that we will build a stronger crypto market again.

If the Nasdaq index were to drop another 25%, interest rates really fall to 7%, and a recession lasts for two and a half years, in that case, I think Bitcoin could drop all the way to $15,000 or $10,000. Then it’s also possible to have a new "clean sweep" of the market.

Fortune: You’ve navigated the economic downturn smoothly and used this time to accumulate stakes in several different companies. What’s the secret?

SBF: First, ask ourselves what methods we have to protect our assets.

Second, stop the current domino effect of "contagion" in the crypto market. If one point is detonated, will it trigger others? Will we see a series of market explosions?

Third, is this a great deal for us? Or more precisely, is there an "unhealthy" deal for us? Don’t try to make extravagant acquisitions. Instead, offer some affordable bids.

Fortune: A seasoned crypto insider believes you will, like Buffett, sit atop your billions with arrogance, expecting everyone to owe you favors. Do you think that’s an exaggeration?

SBF: I hope it’s not an exaggeration, but it certainly is. I hope that once we collaborate with individuals, we can prepare for future cooperation. We try to work together, consider issues from our shared perspective, and then we can think about how to divide the "cake."

FTX is seen as allowing customers to trade derivatives. However, derivatives are a product that few people are aware of, let alone their uses. The branding issues we are working on won’t be aimed at directly acquiring buyers. As you mentioned, most individuals don’t trade crypto derivatives, and we don’t even offer crypto derivatives in the U.S. It’s less about buyer acquisition factors and more about company branding factors. I think the core standard you mentioned is correct; ultimately, we must have use cases that improve individuals' living standards. This is something I hope the company does more of.

Fortune: Do you think the lack of utility in cryptocurrencies is also a drawback for FTX?

SBF: Of course, although we have been actively looking for talent to build more practical crypto applications. I don’t think operating a blockchain social media community is the best choice for FTX, but we are happy to provide technical assistance. I need someone to build it and do it well.

We have been actively searching for compelling instance projects that we can invest in. I’ve talked to our senior Builders, and every time I get the response, "We can’t start a new company in the next three months." However, if no one else does it, we will be the first to take the plunge.

Fortune: You mentioned that you came to the crypto space after discovering a solution that could make a lot of money, rather than because you wanted to change the world or the federal government. That’s a refreshing perspective. However, does your viewpoint put pressure on true believers in crypto?

SBF: It’s my responsibility; some people are skeptical of me, thinking I approach this from a practical rather than an ideological perspective. I believe blockchain is helpful and could lead the world in a better direction. My view is that the crypto business ultimately depends on blockchain, and I hope to represent different groups, even if they initially joined the crypto industry from a different angle.

Fortune: With the rise of authoritarianism, it seems we prefer some form of collectivism to respond to it, even if it’s not Scandinavian-style. However, the worldview of the crypto community is often hyper-liberal and individualistic. Have you ever worried that crypto technology could also lead to a decline in civic order?

SBF: I find that strange. Let me offer you two completely different perspectives. When you think about authoritarianism, you might consider the need for a collective movement to resist it. Or you could also think about how crypto itself is a curse against centralization. I think both are true.

The crypto space will not support tyrannical and indifferent views. You may not be able to stand aside; you must have interaction, and Crypto is part of that.

Fortune: These are some big concepts. Setting aside any major macro shocks, what’s your most accurate guess on the value of Ethereum? Will Bitcoin reach $100,000 in two years?

SBF: Ethereum is too eye-catching. Clearly, with the upcoming merge, there will be huge volatility. I think the price could be higher or worse; I don’t know how to answer that.

I think Bitcoin is easier to predict. If there’s a sudden explosion and liquidation, that’s the problem. However, this massacre brings a bit of extra gain—regulation. This could create a huge external shock. Optimistically, in the coming year, we might be lucky enough to witness BTC at $100,000; that possibility cannot be ruled out. However, if you tell me at the end of this year that Bitcoin’s price will reach $35,000, I would believe that too.

SBF's Crazy Acquisition Map

SBF has been dubbed the "Prince of Danger" for his outstanding trading performance. Throughout the economic downturn, SBF invested in several distressed companies under this label, embodying Warren Buffett's adage, "Be greedy when others are fearful."

The implosion of the crypto market has led most survivors to hoard assets and save money, while SBF seized the second opportunity to look for alternatives. As his influence grows, will FTX become too large for a company that values decentralization? Or, regardless of FTX's performance in the Bahamas, will it anger U.S. regulators? We shall see. Meanwhile, let’s take a look at some of his current acquisition offers, each executed personally by him through the company. At the same time, SBF's dominance has led people to start comparing him to giants like JPMorgan, which profited immensely during the early financial turmoil in the U.S.

BlockFi

At the peak of cryptocurrency growth, BlockFi, a lending company, offered customers returns of 9% or higher by simplifying access to the so-called DeFi market. However, like many of its peers, BlockFi encountered liquidity issues this spring. SBF provided a $400 million credit facility, stating that the loan would help BlockFi "weather the storm and escape the market's impact." If action is not taken, this deal also gives SBF the option to acquire BlockFi at a variable price of up to $240 million.

Robinhood

Since its IPO, Robinhood's stock price has taken a hit, plummeting 80% this spring to below $10. This prompted SBF to make a significant move, acquiring 7.6% of Robinhood. SBF has been cautious about this plan, but there is speculation that he may directly acquire it.

Voyager Digital

Like BlockFi, Voyager is a cryptocurrency lending institution facing solvency issues after a crisis. In June, SBF offered a $200 million loan and 15,000 Bitcoin as collateral. According to documents, FTX is also seen as one of Voyager's largest debtors.

Good Luck Video Games

In March of this year, FTX acquired Good Luck Video Games, a company focused on crypto technology, founded by a veteran player of the game "Magic: the Gathering." This deal helps SBF explore other areas of the crypto market.

Acquisition of Exchanges in Japan, Canada, and South Korea

In February, FTX acquired a Japanese trading platform called Liquid, and then in June, it acquired the Canadian crypto trading platform Bitvo. The specific numbers for each transaction have not been disclosed, but each company was previously valued at over $1 billion. At the end of July, reports emerged that FTX was acquiring the South Korean virtual currency trading platform Bithumb. These acquisitions provide FTX with new opportunities to expand its market while also offering a quick observation window for FTX's global expansion, as the acquired companies have already established relationships with local regulators.