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I'd love to see a Future Fund grantee publicly pledge that in the absence of a clawback, they'll donate the money to GiveDirectly.

I think that would be a very respectable commitment and the sort of thing an EA might do.

I don't think anyone is obliged to do something like this. But wouldn't it be interesting to watch EAs/the media/the general public wrestle with the ethical quandary that would put FTX in?

It's not often you get the opportunity to confront society with a dilemma quite like this - I bet the discussion would be rather illuminating.

No ethical quandry for the FTX estate. The lawyers representing the bankruptcy estate are obliged to recover monies for FTX's creditors. That's their professional duty, not to act as moral arbiters for whether the creditors or GiveDirectly deserve the money more. The million-or-so creditors can decide to give their portion of the recovery to a FTXFF grantee, GiveDirectly, or another charity of their choice. That is their decision to make -- not SBF's. 

Maybe you are right that the lawyers would only see their professional obligation and no ethical problem.

I'm curious where you (or others) think the line might be in similar situations though. At one point do you think a significant fraction of society would think there's a challenging ethical quandary? How about if grantees had already donated their grants to GiveDirectly "earning to give" style and couldn't afford to repay? Or if SBF had just donated everything to GiveDirectly? And what if GiveDirectly had already disbursed all the funds but GiveDirectly's recipients mostly hadn't spent them yet? Do you think still think people would just think "I don't care how unjust the system is that put these people in poverty in the first place. You should obviously take their money and give it back to the (globally) rich."?

These questions are less interesting to me than my original thought because they're not about what actually happened or could happen, but they might make for a thought-provoking piece of short fiction.

<<NOTE: This is all based on a hypothetical>>

The circumstances under which I would find ethical uncertainty are fairly narrow (I can't speak for the rest of society). The following responses don't capture all the potential nuances but give a sense of where I would likely land in most scenarios:

How about if grantees had already donated their grants to GiveDirectly "earning to give" style and couldn't afford to repay?

Then I'd be okay with the debtor going after GiveDirectly itself as a subsequent transferee (cf. 11 USC 550). We just cannot have a society where fraudsters can successfully accomplish their fraudulent ends merely by routing monies through innocent third-party grantors.

And what if GiveDirectly had already disbursed all the funds but GiveDirectly's recipients mostly hadn't spent them yet?

I'd still be OK with the debtor going after GiveDirectly, which probably could return other funds in its possession. Money is fungible. If not, it could always declare bankruptcy and recapitalize itself from future donations [1] if it really were unable to presently repay. That's uncomfortable, but the alternative -- which is awfully close to ratifying SBF's fraud -- is worse to me.

As a practical matter, recoupments from individual beneficiaries would never happen in your hypothetical. Filing suits against individual GD beneficiaries in the US, and then trying to enforce those judgments in a foreign country would be extremely cost-ineffective. This is also where my ethical intuitions start to shift due to a concept we lawyers call detrimental reliance. The beneficiaries would have relied on the existence of that money, and would likely be worse off for having had and have lost than never having had at all. Due to that particular reliance interest, I would cast their moral claim more as the right not to be harmed by SBF's fraud than the right to retain a benefit flowing from SBF's fraud.

In that case, you have two groups with strong moral claims to not getting messed over (the already-paid GD beneficiaries and SBF's victims). The facts that would likely tip me in favor of the GD beneficiaries include their (1) utter inability to evaluate the bona fides of the money source, (2) the absence of any viable alternative method of redressing the harm caused by them getting tangled up in SBF's web, (3) their poverty; and (4) their status as individual persons rather than corporations. 

In contrast, others in the chain like GD would at least knew that the money was from crypto and could have taken legal advice about their risk exposure. And bankruptcy with recapitalization is an option for GD -- that step would mean they could serve fewer people than if they were allowed to keep the money free and clear, but not fewer than if SBF had never existed at all. [2]Therefore, the harm to GD here in your hypo is not of the same nature as the harm to the beneficiaries.

  1. ^

    In the hypo, suppose GD's sellable assets and cash on hand were $25MM. At the risk of simplification, GD could declare bankruptcy and its creditors aren't likely to get more than $25MM. Often, this can be paid in part out of future revenue -- which is what the Boy Scouts did in the US if I recall correctly. Or some donor could cut a $25MM check for the creditors to go away.

  2. ^

    I don't give a lot of weight to the interests of those who would have counterfactually been future beneficiaries if GD were allowed to keep the money, but will not be beneficiaries due to the need to return it. In my book, that's predominately an interest in receiving a benefit from SBF's fraud, which is not a legitimate interest in my book.

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