What is this?
- I thought it would be useful to assemble an FAQ on the FTX situation.
- This is not an official FAQ. I'm not writing this in any professional capacity.
- This is definitely not legal or financial advice or anything like that.
- Please let me know if anything is wrong/unclear/misleading.
- Please suggest questions and/or answers in the comments.
What is FTX?
Who is Sam Bankman-Fried (SBF)?
- The founder of FTX. He was recently a billionaire and the richest person under 30.
How is FTX connected to effective altruism?
- In the last couple of years, effective altruism received millions of dollars of funding from SBF and FTX via the Future Fund.
- SBF was following a strategy of "make tons of money to give it to charity." This is called "earning to give", and it's an idea that was spread by EA in early-to-mid 2010s. SBF was definitely encouraged onto his current path by engaging with EA.
- SBF was something of a "golden boy" to EA. For example, this.
How did FTX go bankrupt?
- FTX gambled with user deposits rather than keeping them in reserve.
- Binance, a competitor, triggered a run on the bank where depositors attempted to get their money out.
- It looked like Binance was going to acquire FTX at one point, but they pulled out after due diligence.
How bad is this?
- "It is therefore very likely to lead to the loss of deposits which will hurt the lives of 10,000s of people eg here" (Source)
Does EA still have funding?
- Before FTX there was Open Philanthropy (OP), which has billions in funding from Dustin Muskovitz and Cari Tuna. None of this is connected to FTX.
Is Open Philanthropy funding affected?
- Global health and wellbeing funding will continue as normal.
- Because the total pool of funding to longtermism has shrunk, Open Philanthropy will have to raise the bar on longtermist grant making.
- Thus, Open Philanthropy is "pausing most new longtermist funding commitments" (longtermism includes AI, Biosecurity, and Community Growth) for a couple of months to recalibrate.
How much of EA's money came from FTX Future Fund?
- As per the post Historical EA funding data from August 2022, the estimation for 2022 was:
- Total EA funds: 741 M$
- FTX Future Fund contribution: 262 M$ (35%)
- (This Q&A contributed by Miguel Lima Medín.)
If you got money from FTX, do you have to give it back?
- "If you received money from an FTX entity in the debtor group anytime on or after approximately August 11, 2022, the bankruptcy process will probably ask you, at some point, to pay all or part of that money back."
- "you will receive formal notice and have an opportunity to make your own case"
- "this process is likely to take months to unfold" and is "going to be a multi-year legal process"
- If this affects you, please read this post from Open Philanthropy. They also made an explainer document on clawbacks.
What if you've already spent money from FTX?
- It's still possible that you may have to give it back.
If you got money from FTX, should you give it back?
- You probably shouldn't, at least for the moment. If you gave the money back, there's the possibility that because it wasn't done through the proper legal channels you end up having to give the money back twice.
If you got money from FTX, should you spend it?
- Probably not. At least for the next few days. You may have to give it back.
I feel bad about having FTX money.
- Reading this may help.
- "It's fine to be somebody who sells utilons for money, just like utilities sell electricity for money."
- "You are not obligated to return funding that got to you ultimately by way of FTX; especially if it's been given for a service you already rendered, any more than the electrical utility ought to return FTX's money that's already been spent on electricity"
What if I'm still expecting FTX money?
- The FTX Future Fund team has all resigned, but "grantees may email firstname.lastname@example.org."
- "To the extent you have a binding agreement entitling you to receive funds, you may qualify as an unsecured creditor in the bankruptcy action. This means that you could have a claim for payment against the debtor’s estate" (source)
I needed my FTX money to pay the rent!
- Nonlinear has stepped in to help: "If you are a Future Fund grantee and <$10,000 of bridge funding would be of substantial help to you, fill out this short form (<10 mins) and we’ll get back to you ASAP."
I have money and would like to help rescue EA projects that have lost funding.
- You can contribute to the Nonlinear emergency fund mentioned above.
- "If you’re a funder and would like to help, please reach out: email@example.com"
How can I get support/help (for mental health, advice, etc)?
- "Here’s the best place to reach us if you’d like to talk. I know a form isn’t the warmest, but a real person will get back to you soon." (source)
- Some mental health advice here.
- Someone set up a support network for the FTX situation.
How are people reacting?
- Will MacAskill: "If there was deception and misuse of funds, I am outraged, and I don’t know which emotion is stronger: my utter rage at Sam (and others?) for causing such harm to so many people, or my sadness and self-hatred for falling for this deception."
- Rob Wiblin: "I am ******* appalled. [...] FTX leaders also betrayed investors, staff, collaborators, and the groups working to reduce suffering and the risk of future tragedies that they committed to help."
- Holden Karnofsky: "I dislike “end justify the means”-type reasoning. The version of effective altruism I subscribe to is about being a good citizen, while ambitiously working toward a better world. As I wrote previously, I think effective altruism works best with a strong dose of pluralism and moderation."
- Evan Hubinger: "We must be very clear: fraud in the service of effective altruism is unacceptable"
Was this avoidable?
- Nathan Young notes a few red flags in retrospect.
- But on the other hand:
Did leaders in EA know about this?
Will there be an investigation into whether EA leadership knew about this?
- Tyrone-Jay Barugh has suggested this, and Max Dalton (leader of CEA) says "this is something we’re already exploring, but we are not in a position to say anything just yet."
Why didn't the EA criticism competition reveal this?
- (This question was posed by Matthew Yglesias)
- Bruce points out that there were a number of relevant criticisms which questioned the role of FTX in EA (eg). However, there was no good system in place to turn this into meaningful change.
Does the end justify the means?
- Many people are reiterating that EA values go against doing bad stuff for the greater good.
- Will MacAskill compiled a list of times that prominent EAs have emphasised the importance of integrity over the last few years.
- Several people have pointed to this post by Eliezer Yudkowsky, in which he makes a compelling case for the rule "Do not cheat to seize power even when it would provide a net benefit."
Did Qualy the lightbulb break character?