Every startup has a startup story. Apple was two hackers in a Los Altos garage. Google was two grad students in a Stanford dorm room. Alameda Research was just one guy in a Berkeley apartment, making a single cryptocurrency trade. That guy was Sam Bankman-Fried, or SBF to his friends. Yet the trade he made, which eventually led to the crypto-trading platform FTX, is far from the standard Silicon Valley creation tale. In 2017, when he was merely 25, SBF collapsed the so-called kimchi premium, an anomalous delta between the price of Bitcoin in much of Asia and its price in the rest of the world. It was a daring feat of arbitrage—SBF is the only trader known to have pulled this off in any meaningful way—one which quickly made him a billionaire and achieved the status of legend.

Among Wall Street’s financial elite, SBF’s Bitcoin arb is mentioned in the same hushed tones as Paul Tudor Jones’s 1987 shorting of the entire American economy, or George Soros’s 1992 raid on the Bank of England, or John Paulson’s 2008 bet against subprime mortgages. Alameda’s capture of the kimchi premium (and other trades like it) gave SBF the grubstake he needed for his next move: founding the crypto exchange FTX—a company that may very well end up creating the dominant all-in-one financial super-app of the future. Nothing is a sure bet in crypto, but just the possibility that FTX could join—or even eclipse—the big four of American banking (JPMorgan Chase, Bank of America, Wells Fargo and Citibank) means it’s already valued at $32 billion. SBF himself has amassed more wealth in a shorter period of time than anyone else, ever. The 2022 Forbes Billionaires List pegs SBF’s net worth at $24 billion. He’s now 30 years old. But we get ahead of ourselves.

SBF learned to trade at Jane Street, an under-the-radar high-frequency trading shop in New York’s financial district. The firm recruits from the smartest students in math and physics at MIT. SBF, a physics major at MIT, had interned at Jane Street in the summer of 2013 and was one of the few such recruits invited back for a full-time job. He was put to work as a market maker trading global ETFs—more difficult than simply making a market for a single stock, in the same way Tri-Dimensional Chess is more difficult than the bog-standard variety.

Not long before interning at Jane Street, SBF had a meeting with Will MacAskill, a young Oxford-educated philosopher who was then just completing his PhD. Over lunch at the Au Bon Pain outside Harvard Square, MacAskill laid out the principles of effective altruism (EA). The math, MacAskill argued, means that if one’s goal is to optimize one’s life for doing good, often most good can be done by choosing to make the most money possible—in order to give it all away. “Earn to give,” urged MacAskill.

EA traces its roots to philosopher Peter Singer, who reasons from the utilitarian point of view that the purpose of life is to maximize the well-being of others. Singer, in his eighth decade, may well be the most-read living philosopher. In the 1970s, Singer almost single-handedly created the animal rights movement, popularizing veganism as an ethical solution to the moral horror of meat. Today he’s best known for the drowning-child thought experiment. (What would you do if you came across a young child drowning in a pond?) Singer states the obvious—and then universalizes the underlying principle: “Few could stand by and watch a child drown; many can ignore the avoidable deaths of children in Africa or India. The question, however, is not what we usually do, but what we ought to do.” In a nutshell, Singer argues that it’s a moral imperative of the world’s well-off to give as much as possible—10, 20, even 50 percent of all income—to better the lives of the world’s poor.

MacAskill’s contribution is to combine Singer’s moral logic with the logic of finance and investment. One not only has an obligation to give a significant percentage of income away, MacAskill argues, but to give it away as efficiently as possible. And, since every charity claiming to save lives has a budget, they can all be ranked by cost-effectiveness. So, how much does it cost for a charity to save a single life? The data says that controlling the spread of malaria and worms has the biggest bang for the buck, with a life saved per every $2,000 invested. Effective altruism prioritizes this low-hanging fruit—these are the drowning children we’re morally obligated to save first.

Though EA originated at Oxford, it has found most of its traction in the Bay Area. Such fixtures in the Silicon Valley firmament as Dustin Moskovitz and Reid Hoffman have publicly endorsed the idea, as have tech oracles like Eric Drexler and Aubrey de Grey. The EA rank and file draws from the rationalist movement, a loose intellectual confederation of scruffy, young STEM-oriented freethinkers who typically (or, perhaps, stereotypically) blog about rationality and live gender-fluid, polycurious lifestyles in group houses in Berkeley and Oakland.

SBF is from the Bay Area—the eldest son of two Stanford law professors, Joe Bankman and Barbara Fried. His parents raised him and his siblings utilitarian—in the same way one might be brought up Unitarian—amid dinner-table debates about the greatest good for the greatest number. One of SBF’s formative moments came at age 12, when he was weighing arguments, pro and con, around the abortion debate. A rights-based theorist might argue that there aren’t really any discontinuous differences as a fetus becomes a child (and thus fetus murder is essentially child murder). The utilitarian argument compares the consequences of each. The loss of an actual child’s life—a life in which a great deal of parental and societal resources have been invested—is much more consequential than the loss of a potential life, in utero. And thus, to a utilitarian, abortion looks more like birth control than like murder. SBF’s application of utilitarianism helped him resolve some nagging doubts he had about the ethics of abortion. It made him comfortable being pro-choice—as his friends, family, and peers were. He saw the essential rightness of his philosophical faith.

Highly mathletic, SBF breezed through Crystal Springs Uplands, an elite prep school in Hillsborough, California. Though he earned top marks, he kept to himself, spending most of his free time playing computer games (StarCraft, League of Legends) and a trading card game, Magic: The Gathering. But at MIT he found his tribe: fellow pledges at Epsilon Theta, a coed fraternity of supergeeks similarly interested in Magic, and video games. Thetans are fond of debating math, physics, computer science, linguistics, philosophy and logic problems—for fun—at alcohol-free parties.

It was his fellow Thetans who introduced SBF to EA and then to MacAskill, who was, at that point, still virtually unknown. MacAskill was visiting MIT in search of volunteers willing to sign on to his earn-to-give program. At a café table in Cambridge, Massachusetts, MacAskill laid out his idea as if it were a business plan: a strategic investment with a return measured in human lives. The opportunity was big, MacAskill argued, because, in the developing world, life was still unconscionably cheap. Just do the math: At $2,000 per life, a million dollars could save 500 people, a billion could save half a million, and, by extension, a trillion could theoretically save half a billion humans from a miserable death.

MacAskill couldn’t have hoped for a better recruit. Not only was SBF raised in the Bay Area as a utilitarian, but he’d already been inspired by Peter Singer to take moral action. During his freshman year, SBF went vegan and organized a campaign against factory farming. As a junior, he was wondering what to do with his life. And MacAskill—Singer’s philosophical heir—had the answer: The best way for him to maximize good in the world would be to maximize his wealth.

SBF listened, nodding, as MacAskill made his pitch. The earn-to-give logic was airtight. It was, SBF realized, applied utilitarianism. Knowing what he had to do, SBF simply said, “Yep. That makes sense.” But, right there, between a bright yellow sunshade and the crumb-strewn red-brick floor, SBF’s purpose in life was set: He was going to get filthy rich, for charity’s sake. All the rest was merely execution risk.

His course established, MacAskill gave SBF one last navigational nudge to set him on his way, suggesting that SBF get an internship at Jane Street that summer.

***

In 2017, everything was going great for SBF. He was killing it at Jane Street. He was a trader’s trader: so fluent with transactions that others would come watch him work, like one might watch an esports athlete streaming on Twitch. He was giving away 50 percent of his income to his preferred charities, with the biggest donations going to the Centre for Effective Altruism and 80,000 Hours. Both charities focus on building the earn-to-give idea into a movement. (And both had been founded by Will MacAskill a few years before.) He had good friends, mostly fellow EAs. Some were even colleagues. Jane Street was a great place to work, with an enviable corporate culture, plenty of perks, and some of the most generous pay packages in the industry. SBF had launched himself on a trajectory that would make him a very wealthy man. He was extremely happy at Jane Street—and content to stay there forever.

Still, when SBF analyzed the bright future that lay before him, something wasn’t right. He was, he realized, too secure. SBF’s mind had been trained almost from birth to calculate. As a schoolboy the hedonic calculous of utilitarianism had him trying to maximize the utility function (measured in “utils,” of course) for abortion. During his teenage gaming years, his mathematical abilities allowed him to sharpen his tactics—and win. And, of course, every trade SBF ever made at Jane was the subject of a risk/reward calculation. All of it boiled down to expected value. The formula is fairly simple. If the amount won multiplied by the probability of winning a bet is greater than the amount lost multiplied by the probability of losing a bet, then you go for it—irrespective of units. Utils, euros, dollars were all subject to the same reckoning.

But, at Jane, SBF osmosed another trading principle. He learned to be “risk-neutral”: In simple terms, a trader, given a choice between $50 and a 50 percent chance at $100, must be agnostic if they want to maximize the expected value of earnings over a lifetime. Those who prefer the sure win are “risk-averse,” and those who would rather gamble are “risk-lovers.” But both risk-lovers and the risk-averse are suckers, equally. Because, over the long run, they lose out to the risk-neutral, who take both deals without prejudice.

Here, SBF realized, was the rub: When he applied this principle to his own life, he came up short. There was little chance he’d get himself fired from Jane Street. Thus the decision to stick with Jane was a risk-averse preference. It was the logical equivalent of being offered a choice between $50 and 50 percent of $100, and saying, “Give me President Grant.” SBF was risk-neutral on behalf of Jane Street, but not, he realized, for his own life. To be fully rational about maximizing his income on behalf of the poor, he should apply his trading principles across the board. He had to find a risk-neutral career path—which, if we strip away the trader-jargon, actually means he felt he needed to take on a lot more risk in the hopes of becoming part of the global elite. The math couldn’t be clearer. Very high risk multiplied by dynastic wealth trumps low risk multiplied by mere rich-guy wealth. To do the most good for the world, SBF needed to find a path on which he’d be a coin toss away from going totally bust.

Pressed on how he justified the decision to gamble with his future, SBF turns the question around, imagining a world where operating this way is commonplace. In that world, “There’s a thousand of you. Some of you are going to do good, but the starving child doesn’t give a shit about which person it is who does that good. So why are you concerned about this little term in the equation?” To be clear: that “little term” in SBF’s equation is “you”—in other words, the specific person who saves the starving child. SBF is making a distinction between the selfish desire to be a savior and the selfless desire that children be saved—and choosing selflessness. “Obviously, I care about impact,” he says, and by “impact” he means “maximizing the overall chance that someone saves the child.” Thus, logically, it follows that “I am risk-neutral on overall impact.”

In the wake of this epiphany, SBF gave his notice. Caroline Ellison, a friend and colleague who was trading on the equities desk at Jane Street during that time, remembers the moment well. “It was unusual,” she says, “because he decided to quit—not to do anything in particular, but just under the premise that there were a lot of other options out there.”

SBF made a list of possible options, with some notes about each:

1. Journalism—low pay, but a massively outsized impact potential.
2. Running for office—or maybe just being an advisor?
3. Working for the movement—EA needs people!
4. Starting a startup—but what, exactly?
5. Bumming around the Bay Area for a month or so—just to see what happens.

“They all felt kind of compelling,” he remembers, “and I had no idea which was going to be the best.” But he also knew that the only losing choice was to not make a choice, so he closed his eyes and walked through door number five.

That’s when Caroline Ellison lost track of her friend.

***

Ellison is a freckle-faced redhead with a personality that splits the difference between bubbly and nerd-ball. She’s partial to a pair of designer frames that make her look a bit like Edna Mode, the superhero stylist in The Incredibles.

About six months after SBF dropped out, Jane Street sent Ellison on a recruiting trip to California, so she decided to call on her old friend. They’d been office buddies at Jane, but they’d also occasionally socialized outside of work, too, being fellow EA acolytes. Ellison wanted to catch up, but from the get-go, SBF was acting uncharacteristically shifty. There were several canceled coffee dates, and when the two finally did get together—at Jumpin’ Java, an old-school Berkeley coffeehouse with hand-painted murals on the wall and whimsical art in the windows—SBF evaded even the most innocuous of questions.

“So,” Ellison asked after joining SBF at a table, “what have you been up to in the last few months?” Ellison, it should be noted, was dressed as a sultry wood nymph—she was on her way to a LARP (Live Action Role Play) party.

“Oh,” SBF responded cryptically, “I can’t tell you. It’s a secret.”

“Okay, that’s fine,” Ellison said, sipping her tea.

Uncomfortable silence.

“Well, I guess I could tell you if you really want…” SBF offered after a moment.

“Nope. It’s okay.” Sip.

An awkward beat later, SBF broke, slayed by the silent force of Ellison’s four-eyed gaze.

“I’ll just tell you,” he said.

The story was pretty remarkable. After SBF quit Jane Street, he moved back home to the Bay Area, where Will MacAskill had offered him a job as director of business development at the Centre for Effective Altruism. He rented a modest apartment near CEA HQ in Berkeley, he still had a couple of weeks to just explore before his job started. This was his first vacation in, well, ever. In the years working at Jane, SBF had never taken any significant time off.

He spent his vacation just soaking everything in: It was his first time in the Bay Area as an adult, and he found his home turf unexpectedly thrilling. It was where all the new technology was. It was where all the startups were. It was where the bulk of the EA community was starting to congregate. SBF ended up hanging out a lot with his younger brother Gabe, who was living in an EA commune on nearby Stuart Street.

At that time, everyone in the tech world was talking about crypto. In the Bay Area, you couldn’t escape the chatter. The crypto community had been roiled by a “hard fork” earlier in the year, when what had been known simply as Bitcoin underwent a mitosis to become Bitcoin Classic and Bitcoin Cash. Later that year, Bitcoin (Classic) looked like it was going to cross the psychologically important $10,000 mark. Crypto was becoming a thing.

Curious, SBF had started looking into crypto—and almost immediately noticed something strange. Bitcoin was trading at a higher price in Japan and Korea than it was in the U.S. In theory, this should never happen because it represents a riskless profit opportunity—in other words, a free lunch. One simply buys Bitcoin at the lower price, sells it at the higher price, and pockets the difference. Jane Street built an empire on high-frequency trades that took advantage of fraction-of-a-cent price differences. But here was Bitcoin, trading at around $15,000 in South Korea: an unheard-of 50 percent price premium.

SBF was incredulous at the numbers he was seeing on his screen. This is probably not real. But then came the second thought: If it is real, then there’s $5,000 just lying on the ground. Instead of wasting time on internal debate, SBF decided to create some accounts on different exchanges and see if he could execute the trade. He couldn’t. But, interestingly, it wasn’t because the arbitrage opportunity wasn’t there—it was. But there was so much red tape with the banking system and currency controls that it was a difficult trade to execute.

Another day of work dealing with the red-tape problem netted SBF a single round-trip trade—to Asia and back—for a $20 profit. That was it: the proof of concept. There was an opportunity to be had. SBF immediately put $50,000 of his own money to work. The first job was just getting the money into the system. The operational challenges were huge. Not just anyone can walk into a foreign bank and start wiring money out of the country every day. There are know-your-customer rules, caps on withdrawals, citizenship requirements. Even worse, to any normal bank, the constant zeroing out, then maxing out, of a cash account—with the money coming and going overseas, to and from fly-by-night Bitcoin exchanges—raised every red flag in the book. It looked like laundering. It looked like drug money. There were even monetary policy concerns: The liquidity of the South Korean won is sharply limited by the country’s central bank.

Fortunately, SBF had a secret weapon: the EA community. There’s a loose worldwide network of like-minded people who do each other favors and sleep on each other’s couches simply because they all belong to the same tribe. Perhaps the most important of them was a Japanese grad student, who volunteered to do the legwork in Japan. As a Japanese citizen, he was able to open an account with the one (obscure, rural) Japanese bank that was willing, for a fee, to process the transactions that SBF—newly incorporated as Alameda Research—wanted to make. The spread between Bitcoin in Japan and Bitcoin in the U.S. was “only” 10 percent—but it was a trade Alameda found it could make every day. With SBF’s initial $50,000 compounding at 10 percent each day, the next step was to increase the amount of capital. At the time, the total daily volume of crypto trading was on the order of a billion dollars. Figuring he wanted to capture 5 percent of that, SBF went looking for a $50 million loan. Again, he reached out to the EA community. Jaan Tallinn, the cofounder of Skype, put up a good chunk of that initial $50 million.

With a goosed-up capital account, the money started piling up so fast that SBF placed what he refers to as “a market order for employees” to tend to the Rube Goldberg operation that kept the capital spinning. There were constant blowups with banks, which are wary of anything crypto. Crypto was so new that regulators in South Korea and elsewhere were constantly changing their mind about regulations—then making those changes retroactive. It was a swirling mess. Pulled into the vortex was Nishad Singh, a friend of SBF’s brother Gabe, and a fellow EA member. Singh is a bespectacled and baby-faced young man with an earnest mien. He often wears a T-shirt with the words “compassionate to the core” printed, in a diminutive all-lowercase font, over his heart. After just one conversation with SBF, Singh decided to leave Facebook to take on the more meaningful work of building FTX. Caroline Ellison came, too, quitting Jane Street and moving to California only weeks after SBF described the operation to her over tea. The first 15 people SBF hired, all from the EA pool, were packed together in a shabby, 600-square-foot walk-up, working around the clock. The kitchen was given over to stand-up desks, the closet was reserved for sleeping, and the entire space overrun with half-eaten take-out containers. It was a royal mess. But it was also the good old days, when Alameda was just kids on a high-stakes, big-money, earn-to-give commando operation. Fifty percent of Alameda’s profits were going to EA-approved charities.

“This thing couldn’t have taken off without EA,” reminisces Singh, running his hand through a shock of thick black hair. He removes his glasses to think. They’re broken: A chopstick has been Scotch taped to one of the frame’s sides, serving as a makeshift temple. “All the employees, all the funding—everything was EA to start with.”

***

The Bitcoin arbitrage didn’t—and couldn’t—last forever. The Japanese appetite for overpriced Bitcoin withered (or, more likely, another shadowy arbitrage outfit also found its way to the trade and collapsed it). Either way, the spread narrowed to almost nothing. But there were other trades to be had. The simple fact that crypto was new, and that the tools traders needed