Unveiling the Growth and Potential of FTX: A Testimony from Sam Bankman Fried

During his testimony on Friday, Sam Bankman Fried revealed his intentions to sell FTX to cryptocurrency exchange Binance when the platform was still in its early stages. As he worked alongside FTX co-founder Gary Wang in 2019 to establish the now bankrupt exchange in Hong Kong, Bankman Fried already had a clear vision for FTX to specialize in margin trading and provide customers with the opportunity to make significant bets. At that time, Bankman Fried recognized the lack of attention given to margin traders across the exchange landscape and believed that an exchange like Binance would eventually express interest in acquiring FTX.

Binance, currently the largest crypto exchange globally with a trading volume of $4.6 billion in the past day according to CoinGecko, did indeed show interest in purchasing FTX as the exchange faced challenges last November. However, Binance ultimately backed out of the potential acquisition, with CEO Changpeng Zhao citing that the issues with FTX were beyond their control or ability to assist.

Bankman Fried acknowledged that in the early stages of FTX's existence, acquiring customers proved to be a challenge. However, through word of mouth, FTX gradually gained traction and became a viable business. In 2019, FTX generated as much as $20 million in revenue, and by 2021, the platform was generating $3 million in revenue per day.

One of the key selling points of FTX during its early days was its risk engine. Bankman Fried recalled that compared to other exchanges at the time, FTX's risk engine took a more comprehensive view of customers' accounts and was responsible for determining when traders' positions would be liquidated. He further mentioned that while he did not personally write or read the exchange's code during its development, it was Gary Wang who meticulously built the exchange line by line while incorporating Bankman Fried's input on the desired philosophical perspective of the platform.

Bankman Fried's testimony provides valuable insights into the early stages of FTX and sheds light on his strategic vision for the exchange. Despite the challenges faced, FTX managed to establish itself as a notable player in the industry, attracting attention from major players like Binance. With the cryptocurrency landscape continuously evolving, it will be interesting to see how FTX and other platforms adapt to meet the ever-changing demands of traders and investors.