We’re announcing two updates today that we believe will strengthen the effective altruism ecosystem.
FTX updates
First, we’re pleased to say that both Effective Ventures UK and Effective Ventures US have agreed to settlements with the FTX bankruptcy estate. As part of these settlements, EV US and EV UK (which I’ll collectively refer to as “EV”) have between them paid the estate $26,786,503, an amount equal to 100% of the funds the entities received from FTX and the FTX Foundation (which I’ll collectively refer to as “FTX”) in 2022. All of this money was either originally received from FTX or allocated to pay the settlement with the knowledge and support of their original donor. This means that EV’s projects can continue to fundraise with confidence that donations won’t be used to cover the cost of this settlement. We strongly condemn fraud and the actions underlying Sam Bankman-Fried’s conviction.
Also related to FTX, in September we completed an independent investigation about the relationship between FTX and EV. The investigation, commissioned from the law firm Mintz, included dozens of interviews as well as reviews of tens of thousands of messages and documents. Mintz found no evidence that anyone at EV (including employees, leaders of EV-sponsored projects, and trustees) was aware of the criminal fraud of which Sam Bankman-Fried has now been convicted.
While we are not publishing any additional details regarding the investigation because doing so could reveal information from people who have not consented to their confidences being publicized and could waive important legal privileges that we do not intend to waive, we recognize that knowledge of criminal activity isn’t the only concern. I plan to share other non-privileged information on lessons learned in the aftermath of FTX and encourage others to share their reflections as well.
EV also started working on structural improvements shortly after FTX’s collapse and continued to do so alongside the investigation. Over the past year, we have implemented structural governance and oversight improvements, including restructuring the way the two EV charities work together, updating and improving key corporate policies and procedures at both charities, increasing the rigor of donor due diligence, and staffing up the in-house legal departments. Nevertheless, good governance and oversight is not a goal that can ever be definitively ‘completed’, and we’ll continue to iterate and improve. We plan to open source those improvements where feasible so the whole EA ecosystem can learn from EV’s challenges and benefit from the work we’ve done.
We’re pleased to have reached this point and to bring our financial interactions with the FTX bankruptcy to a close. We expect the settlements will permanently resolve matters between EV US + EV UK and the FTX estate, enabling EV, our teams, and our projects to move forward.
Future of EV
Which brings me to our second announcement: Now that we consider matters with the FTX estate to be resolved, we are planning to take significant steps to decentralize the effective altruism ecosystem by offboarding the projects which currently sit under the Effective Ventures umbrella. This means CEA, 80,000 Hours, Giving What We Can and other EV-sponsored projects will transition to being independent legal entities, with their own leadership, operational staff, and governance structures. We anticipate the details of the offboarding process will vary by project, and we expect the overall process to take some time – likely 1-2 years until all projects have finished.
EV served an important purpose in allowing these projects to launch with lower friction, but the events of last year also made the costs of centralization and EV’s structure much more salient. Many of our projects are now well established and will benefit from independent structures designed with their specific needs in mind, though I also suspect that there will be some friction as they establish their new operating models. Despite the potential costs, we are convinced this push towards decentralization will make the EA ecosystem more resilient and better enable our projects to pursue their own goals. We’ve learned a lot through the mistakes and success that occurred while building EV and we plan to share additional reflections when they are ready.
Dear Stephen and the EA community:
Shortly after the early November 2022 collapse of FTX, EV asked me and my law firm, Mintz, to conduct an independent investigation into the relationship between FTX/Alameda and EV. I led our team’s investigation, which involved reviewing tens of thousands of documents and conducting dozens of witness interviews with people who had knowledge about EV’s relationship with FTX and Alameda. As background, I spent 11 years serving as a federal prosecutor in the United States Attorney’s Office for the Southern District of New York, the same USAO that prosecuted Sam Bankman-Fried and the other FTX/Alameda executives.
I can confirm that the statements in Zach Robinson’s post from yesterday, December 13, 2023, about the results of the investigation are 100% true and accurate.
Mintz’s independent investigation found no evidence that anyone at EV knew about the alleged fraudulent criminal conduct at FTX and Alameda. This conclusion was later reinforced by the evidence at this fall’s trial of United States v. Sam Bankman-Fried, where the three cooperating witnesses who had all pled guilty (Caroline Ellison, Gary Wang, and Nishad Singh) testified that only four people knew about the alleged criminal fraud – those three people plus SBF. Accordingly, the testimony at the SBF trial was consistent with our conclusion that there is no evidence that anyone at EV knew about the alleged criminal fraud.
Finally, I want to add this point. Over the last year, my team and I had the chance to meet dozens of people affiliated with the various EV projects. We were consistently impressed by everyone’s genuine commitment and dedication to the EA mission, particularly during a very challenging year. I wish you all the best in your future endeavors.
-- Jason P.W. Halperin