I've been reviewing funding requests as part of Nonlinear's effort to help FTXF grantees. Many applications sound like this:
FTX Future Fund already paid me, so I have plenty of money. I can't spend any of it, since I'm worried about clawbacks. This leaves me practically destitute.
Imagine you could buy insurance against these clawbacks:
Amy has $20,000 in her bank account, but it's all from an FTX grant
Bill owns an insurance company. He believes the chance of a successful clawback is much less than 25%, and he charges Amy $5,000 for the insurance
Now Amy is comfortable spending her remaining $15,000. If a clawback happens, Bill pays her $20,000, and she's unharmed
Seems like a win-win for Amy and Bill. Is there a way to make it happen?
Is it not possible that, if it became public knowledge that grants were insured against clawback, lawyers would try harder to get them? If the money is already spent and it’s a bunch of broke individuals, it may not be worth the expense of trying to claw it back. I guess that would just be something Bill would have to account for.