Suffice it to say, FTX and Sam-Bankman Fried are in a crisis that could threaten them being in prison, assuming fraud happened.
Here's the initial post to the FTX crisis:
So my question is, what should EAs do in response, and how can they avoid something like this happening again?
One thing that I think would be helpful is a discussion of the corrosive effect of certain kinds of dishonesty and criminality on the communities we live, big and small. Some kinds of acts tend to weaken the trust we have of our communities thus crippling our abilities to act together, which is often critical.
This is why, even from a pure utilitarian perspective, there should be a strong presumption against certain kinds of dishonesty and criminal activities. The knock-on effects, upon discovery, are often orders of magnitude larger, and negative, than the direct effects. And, since we think in EV terms, when we incorporate this into our decision making, criminal and/or dishonest decisions are seldom justified.
Perhaps the discussion of the perils of using socially corrosive behavior to further one's ends is discussed in EA, but I have not seen it much in my experience.
One thing we can do as a community is come up with ethical principles for earning to give and expect our donors to adhere to them.
It's good to be more ambitious and risk-loving than most entrepreneurs and other people who aim to make money, but you have to do it responsibly. Being cooperative and acting with integrity are in CEA's guiding principles; we need to articulate publicly and prominently that they also make the world a better place. Personally, I lean towards rule utilitarianism, so this view is second nature to me. But we should be able to justify this view using the thinnest possible version of consequentialism.
Also, good risk management is important to every successful business regardless of its risk appetite. FTX was insanely over-leveraged and exposed to wrong-way risk, which made it vulnerable to imploding in the way it did. Risk is fine; stupidity is not.
Absolutely never become involved with cryptocurrency in any way, shape, or form ever again. It's poison on every level. It's environmentally devastating. It enables crime. And, well, it's a Ponzi scheme.
A good read about crypto: https://www.currentaffairs.org/2022/05/why-this-computer-scientist-says-all-cryptocurrency-should-die-in-a-fire
Re environmental devastation: Ethereum, the 2nd largest crypto, now runs on Proof-of-Stake, using 99.99% less energy than it did before September[1], and a total carbon footprint of only 870 tonnes CO2e, so I don't think it is valid to tar all crypto with this brush.
Proof-of-Stake, in plain English, means that all holders of crypto are periodically gifted more crypto in proportion to the amount of crypto they already owned. It means the richest people are made richer. Meanwhile, the poorest people's crypto is reduced in value by the creation of all that new crypto which is being handed specifically to the rich.
If your solution to the energy problem is to aggressively worsen economic inequality instead, well, sadly, you've just replaced one problem with another. Or, even more accurately, you've replaced one problem by ... (read more)
Downvotes here seem unfair and culty for an honest opinion. (Though I admit I haven't checked the linked article, and maybe it's bad.)
I am not invested in crypto in any way and I also believe that most of crypto is a scam, yet there are some diamonds in the mud. The fact that this technology, for instance, enables prediction markets with actual money (regardless of the feelings of the regulators) seems very valuable to me. I would recommend caution with this technology and industry, not outright rejection.
EAs should:
I wrote a post on damage mitigation ~2 days ago, but it got brigaded by a bunch of poorly-informed, overconfident people:
https://forum.effectivealtruism.org/posts/HJbd7Fwzh6BZGK6En/two-key-strategies-to-mitigate-the-damage-from-losing-ftx-2
I'm having a bit of trouble articulating why, but I'm not that bullish on the EA forum as the best place to coordinate on this.
I think perhaps a public education course - as much for EAs themselves as for everyone else - that while the ends do sometimes justify the means, they often don't, and when using extremely dodgy means you have to be unbelievably confident that your ends are worth it and that no other means will do. In short, I think EA should come to firmly reject the philosophy of the street mugger - that he (we) is justified in taking other people's money just because he (we) thinks or even knows that he (we) can do better things with the money than the people in question. People have rights and we shouldn't steal from them, and honesty, decency, civility are all very important things. AI risk or pandemic prevention of course might be important too, but it's not necessarily more important than maintaining basic societal norms like "don't steal". In short, EA's chronic and severe epistemic overconfidence problem should be publicly addressed.
Proof-of-Stake, in plain English, means that all holders of crypto are periodically gifted more crypto in proportion to the amount of crypto they already owned. It means the richest people are made richer. Meanwhile, the poorest people's crypto is reduced in value by the creation of all that new crypto which is being handed specifically to the rich.
If your solution to the energy problem is to aggressively worsen economic inequality instead, well, sadly, you've just replaced one problem with another. Or, even more accurately, you've replaced one problem by worsening another already-fatal problem, because the entire reason people buy into Bitcoin is that they hope to speculate on it as its value rises. This, of course, gives the greatest rewards to the richest people, because they were able to buy the most Bitcoin in the first place.
Proof-of-work crypto already drives horrific inequality, because it is simply a speculative asset. Proof-of-stake drives it far faster, because it is a speculative asset which multiplies itself, handing the new coins to the people who already had the most coins.
...Until it all collapses, that is, because it's a Ponzi scheme.
PoS does not alter the fundamental truth that *every* cryptocurrency is a Ponzi scheme (see the article I linked to in my previous comment). So honestly, all this talk I'm giving about the environmental and macroeconomic effects of crypto is laughable. It's a Ponzi scheme! Why would we need to have a discussion that goes into any more detail than that? Why would any of this other stuff even matter when we are talking about a Ponzi scheme? Why does anything else even need to be said?