My reaction to FTX: appalled

Robert_Wiblin

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My reaction to FTX: appalled

by Robert_Wiblin

Nov 11 20222 min read 73

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CommunityFTX collapseFTX Foundation

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I thought I would repost this thread I wrote for Twitter.

I've been waiting for the Future Fund people to have their say, and they have all resigned (https://forum.effectivealtruism.org/posts/xafpj3on76uRDoBja/the-ftx-future-fund-team-has-resigned-1).

So now you can hear what I think.

I am ******* appalled.

If media reports of what happened are at all accurate, what at least two people high up at FTX and Alameda have done here is inexcusable (e.g. https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732).

Making risky trades with depositors’ funds without telling them is grossly immoral.

(I'm gripped reading the news and Twitter like everyone else and this is all based on my reading between the lines of e.g.: https://twitter.com/astridwilde1/status/1590763404851281920, https://twitter.com/jonwu_/status/1590099676744646656, https://www.ft.com/content/593cad86-683c-4444-ac7b-c5c875fb4d95, https://www.wsj.com/articles/binance-is-said-to-be-likely-to-walk-away-from-deal-to-buy-ftx-11668020963

I also speak only for myself here.)

Probably some story will come out about why they felt they had no choice, but one always has a choice to act with integrity or not to.

One or more leaders at FTX have betrayed the trust of everyone who was counting on them.

Most importantly FTX's depositors, who didn't stand to gain on the upside but were unwittingly exposed to a massive downside and may lose savings they and their families were relying on.

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.

No plausible ethics permits one to lose money trading then take other people's money to make yet more risky bets in the hope that doing so will help you make it back.

That basic story has blown up banks and destroyed lives many times through history.

Good leaders resist the temptation to double down, and instead eat their losses up front.

In his tweets Sam claims that he's working to get depositors paid back as much as possible.

I hope that is his only focus and that it's possible to compensate the most vulnerable FTX depositors to the greatest extent.

To people who have quit jobs or made life plans assuming that FTX wouldn't implode overnight, my heart goes out to you. This situation is fucked, not your fault and foreseen by almost no one.

To those who quit their jobs hoping to work to reduce suffering and catastrophic risks using funds that have now evaporated: I hope that other donors can temporarily fill the gap and smooth the path to a new equilibrium level of funding for pandemic prevention, etc.

I feel it's clear mistakes have been made. We were too quick to trust folks who hadn't proven they deserved that level of confidence.

One always wants to believe the best about others. In life I've mostly found people to be good and kind, sometimes to an astonishing degree.

Hindsight is 20/20 and this week's events have been frankly insane.

But I will be less trusting of people with huge responsibilities going forward, maybe just less trusting across the board.

Mass destruction of trust is exactly what results from this kind of wrong-doing.

Some people are saying this is no surprise, as all of crypto was a Ponzi scheme from the start.

I'm pretty skeptical of crypto having many productive applications, but there's a big dif between investing in good faith in a speculative unproven technology, and having your assets misappropriated from you.

The first (foolish or not) is business. The second is illegal.

I'll have more to say, maybe after I calm down, maybe not.

325 Reactions

Mentioned in

321A personal reflection on SBF

200EA is a global community - but should it be?

176Thoughts on FTX and returning to our ideals

144FTX FAQ

109The FTX Situation: Wait for more information before proposing solutions

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David Mathers1y88

Without in any sense wanting to take away from the personal responsibility of the people who actually did the unethical, and probably illegal trading, I think there might be a couple of general lessons here:

1) An attitude of 'I take huge financial risks because I'm trading for others, not myself, and money has approx. 0 diminishing marginal utility for altruism, plus I'm so ethical I don't mind losing my shirt' might sound like a clever idea. But crucially, it is MUCH easier psychologically to think you'll just eat the loss and the attendant humiliation and loss of status, before you are actually facing losing vast sums of money for real. Assuming (as seems likely to me) that SBF started out with genuine good intentions, my guess is this was hard to anticipate because of a self-conception as "genuinely altruistic" blocked him from the idea he might do wrong. The same thing probably stopped others hearing about SBF taking on huge risks, which of course he was open* about, from realizing this danger.

2) On reflection, the following is a failure mode for us as a movement combining a lot of utilitarians (and more generally, people who understand that it is *sometimes, in principle... (read more)

oivavoi1y80

Great comment. First comment from new forum member here. Some background: I was EA adjacent for many years, and donated quite a lot of income through an EA organization, and EA people in my community inspired me to go vegan. Still thankful for that. Then I was heavily turned off by the move towards longtermism, which I find objectionable on many grounds (both philosophical and political). This is just to give you some background on where I'm coming from, so read my comment with that in mind.

I would like to pick up on this part: "Assuming (as seems likely to me) that SBF started out with genuine good intentions, my guess is this was hard to anticipate because of a self-conception as "genuinely altruistic" blocked him from the idea he might do wrong". I think this is true, and I think it's crucial for the EA community to reflect on these things going forward. It's the moral licensing or self-licensing effect, which is well described in moral psychology - individuals who are very confident they are doing good may be more likely to engage in bad acts.

I think, however, that the EA community at large in recent years have started to suffer from a kind of intellectual sel... (read more)

philgoetz1y20

If you'll read the IPCC's Synthesis reports, you'll see the only existential risks due to climate change that they predict are to shellfish, coral communities, and species of the arctic tundra. They also mention some Amazonian species, but they're in danger less from climate change than from habitat loss. The likely harm to humans, expressed in economic terms, is a loss of less than 1% of world GNP by 2100 AD, accompanied by a raise in sea level of less than one foot [1]. I don't think that even counts the economic gains from lands made fertile by climate change (I couldn't find any reference to them). (I'm going off the Fifth Synthesis Report; the sixth should come out very soon.)

The most devastating change, which is the melting of the Greenland ice cap, was predicted to occur between 3000 and 4000 AD, and even that isn't an existential risk.

[1] I've tweaked that a little bit--IIRC, they predicted a loss of world GNP ranging from 0.2% to 2%, and a range in sea level change which goes over 1 foot at the top end. A difficulty in dealing with IPCC forecasts is that they explicitly refuse to attach probabilities to any of their scenarios, and often expres... (read more)

philgoetz

I see lots of downvotes, but no quotations of any predictions from any recent IPCC report that could qualify as "existential risk".

Jacy1y15

I didn't downvote, and the comment is now at +12 votes and +8 agreement (not sure where it was before), but my guess is it would be more upvoted if it were worded more equivocally (e.g., "I think the evidence suggests climate change poses...") and had links to the materials you reference (e.g., "[link] predicted that the melting of the Greenland ice cap would occur..."). There also may be object-level disagreements (e.g., some think climate change is an existential risk for humans in the long run or in the tail risks, such as where geoengineering might be necessary).

The EA Forum has idiosyncratic voting habits very different from most of the internet, for better or worse. You have to get to know its quirks, and I think most people should try to focus less on votes and more on the standards for good internet discussion. The comments I find most useful are rarely the most upvoted.

philgoetz

You're right about my tendency towards tendentiousness. Thanks! I've reworded it some. Not to include "I think that", because I'm making objective statements about what the IPCC has written.

oivavoi

Have you read the full reports, which cover thousands of pages? I would guess that you haven't - but my apologies if you have. I've read about 2/3s of the 3000 pages in the most recent one, and I have read most previous IPCC reports as well. In short, I think you actually demonstrate some of my criticism: An intellectual over-confidence in one's abilities to outsmart others, which leads to erroneous conclusions and cherry-picking. It's similar in style to Eliezer's claim on another thread that sexual relations between co-workers are unproblematic in a high-risk work environment, based on his assumed superior ways of reasoning - a claim which flies in the face of tried and true best practices in most high-risk work environments. Most climate researchers are extremely worried about what we're facing. Most people who have been following the climate situation for many years are also extremely worried. But your own reading of some parts of IPCC reports gives you confidence that we're going to do more or less fine? Well, to each his own. (edited this section because it was too confontational in tone) To elaborate a bit: the reason IPCC reports don't include anything on existential risk for humanity is that this has not been part of the IPCC mandate. There have AFAIK been no calculations of the probability that climate change will lead to human extinction, or even how many milions or billions we can assume to die prematurely over the next century because of climate change. Kemp (who's employed at a EA aligned center) came out with an excellent article together with associates this year, which goes in more detail on these questions: Climate Endgame: Exploring catastrophic climate change scenarios | PNAS A central epistemological point of departure - which the Kemp article briefly covers - is that IPCC have been shown historically to consistently err on the cautious side. This has to do both with the nature of achieving global agreement between researchers, with the poli

philgoetz1y25

I'm not claiming to have outsmarted anyone. I have claimed only that I have read the IPCC's Fifth Synthesis Report, which is 167 pages, and it doesn't report any existential threats to humans due to climate changes. It is the report I found to be most often-cited by people claiming there are existential threats to humans due to global warming. It does not support such claims, not even once among its thousands of claims, projections, tables, graphs, and warnings.

Neither did I claim that there is no existential threat to humanity from global warming. I claimed that the IPCC's 5th Synth report doesn't suggest any existential threat to humanity from global warming.

Kemp is surely right that global warming "is" an existential threat, but so are asteroid strikes. He's also surely right that we should look carefully at the most-dangerous scenarios. But, skimming Kemp's paper recklessly, it doesn't seem to have any quantitative data to justify the panic being spread among college students today by authorities claiming we're facing an immediate dire threat, nor the elevation of global warming to being a threat on a par with artificial intelligence, n... (read more)

Noah Scales1y19

Here's some information:

the approval process of the SPM in the 2014 AR5 Synthesis report includes a line-by-line approval process involving world governments participating in the IPCC. Synthesis report Topic sections get a section-by-section discussion by world governments. That includes petro-states. The full approval process is documented in the IPCC Fact Sheet. The approval and adoption process is political. The Acceptance process used for full reports is your best choice for unfiltered science.
The AR5report you have been reading was put out 8 years ago. That is a long time in climate science. During that time, there's been tracking of GHG production relative to stated GHG-reduction commitments. There's also new data from actual measurements of extreme weather events, tipping point systems, and carbon sinks and sources. If you like the synthesis report or believe in its editing process, the AR6 Synthesis report is due out. Meanwhile, there's ongoing workshops available to watch on-line, plenty of well-known papers, and other options too. Here's a discussion of a massive signatory list attached to a declaration of climate emergency in 2022. Climate scientists are engaged

... (read more)

oivavoi

Thanks a lot for taking the time to answer in such detail. You are more patient than I am. Great points. I fully agree that reduced energy use going forward is absolutely essential. That is one reason I decided to abstain from flying some years ago, in order to send a costly signal about what is needed. I am not sure I share your pessimism concerning alternative energy sources, though. Sunny parts of the world can build out lots of solar energy - with storage - fairly quickly. Non-sunny and stable parts of the world can build nuclear energy rapidly, like France and Sweden did in the 70s and 80s. The modelling that has been done these issues have generally found that it is feasible to arrive at zero-carbon economies within two or three decades, if one combines changes in consumption and demand with rapid build-out of low-carbon energy sources. If we abolish animal agriculture and rewild large parts of the world, stop the expansion of private car use, fly less, etc - AND build nuclear and renewables like crazy, all while starting to keep fossil fuels in the ground, things can indeed change. Here's a very recent study, for example, which finds that a rapid transition is possible and not extremely expensive: Empirically grounded technology forecasts and the energy transition: Joule (cell.com) Such modelling is uncertain, of course, but I don't think the present state of research validates deep pessimism about the physical possibility of doing an energy transition. The real difficulties seem political to me: Groups and actors who are heavily invested in polluting economic sectors and activities, and will often fight against change. (I do believe that we will have to patch things up with solar radiation management in the end though, even though that will open up a new can of worms) Not saying that any of this is going to happen or even that it's likely, but the possibility to turn things around is there. It strikes me as odd that so many EAs seem uninterested in wo

Noah Scales

OK, Oivavoi. My complaint about renewables is that they suggest an ideological stance that is too close to the stance that is the problem: * a refusal to accept limits on economic growth and energy production. * a focus on consumption patterns rather than production patterns. * a preference to reduce costs of production and tell people to "just say no" rather than reduce consumption through increasing costs of production. * a reliance on technology to boost production rather than use existing production more efficiently. This ideology is basically one of economic growth, and is what got us into our problem in the first place. But thank you for sharing that resource, there's plenty there to explore. To constrain my earlier statements against renewables, I do believe in uses like: * solar water heating. * underground cold storage. * swamp coolers. You can read more below, if you like. ---------------------------------------- renewables as a source of additional energy production, even if cheaper than fossil fuel sources, face issues with: * intermittent production * battery storage (solar, wind) * waste disposal (nuclear) * pollution risks (nuclear) * lifetime (solar, wind) * stakeholder support * nimbyism As a quick illustration of the problem with a consumption-focused ideology, lets think about recent transportation choices in the US. In the US there have been opportunities to build fuel-efficient cars for a long time. Instead, we chose (I'm American) energy-guzzling SUV's and big trucks. Lighter cars, lower speed limits, aerodynamic shaping, and smaller engines would have saved a lot of fuel since the 1970's oil crisis. Carpooling, trains, recumbent bikes with traffic lights, less urbanization, fewer cars overall, energy independence, all ideas floating around back in the 1970's. Back then we really did have time to make those changes, I think. We could have restrained our energy production, but kept using fossil fuels without guilt and ser

philgoetz

Thanks! That's a lot to digest. Do you know how "government approval" of IPCC reports is implemented, e.g., does any one government have veto power over everything in the report, and is this approval granted by leaders, political appointees, or more-independent committees or organizations? Re. "Right now, I believe that all renewables are a sideshow, cheap or not, until we grasp that population decline and overall energy consumption decline are the requirements of keeping our planet livable for our current population" -- How does this belief affect your ethics? For instance, does this mean the US should decrease immigration drastically, to force poor countries to deal with their population problem? Should the US reduce grain exports? How would you approach the problem that the voluntary birth rate is higher in dysfunctional and highly-religious cultures than in stable developed secular ones? What are we to do about religions which teach that contraception is a sin?

Noah Scales

Well, as I understand the SPM voting process, veto approval is line-by-line, so in that sense, each sentence is approved by some representative from each country. I don't think there's one country that can veto while others cannot,and commentary I've seen on the process is vague, but seems to claim it's a simple democracy. Let me know if you learn more. As far as exploring the details of US immigration, grain exports, and birth rate distribution, I generally favor shifting costs for the global crisis onto developed countries, where resource consumption is higher and historical responsibility for the crisis rests. Therefore, paying for the reparations that the Global South wants (some $700 billion, I read someplace) is a good idea. Reducing birth rates in all countries is appropriate, and typical measures are such things as: * free health services. * free birth control (edit: I mean contraception). * free health education. * support of education and economic rights for women. I think the focus of family planning belongs on developed countries where resource consumption is higher. The concern is number of births, not global immigration flows. If I were a longtermist, I would favor a generation-on-generation use of family planning to discourage population growth, leading, within some few hundred years, to a small Earth population, that can then remain stable for many millennia. My idea of small is a few million people. That further allows human beings to stay within an ecological niche rather than destroy the resources that they need for long-term survival on planet Earth. Obviously, I am less concerned with technological stagnation than some. EDIT: I should make clear that: * family planning has plenty of critics. I don't have much sympathy for their views, but since family planning is a controversial topic, I expect that critics of the idea will prevent proactive family planning in some developed countries. * my view of an ethical longtermist goal is not

philgoetz

Why only a few million? You'll have to kill 9 billion people, and to what purpose? I don't see any reason to think that the current population of humans wouldn't be infinitely sustainable. We can supply all the energy we need with nuclear and/or solar power, and that will get us all the fresh water we need; and we already have all the arable land that we need. There just isn't anything else we need. Re. "You had mentioned concern about there being no statements of existential threat from climate change. Here's the UN Secretary General's speech on climate change where he claims that climate change is an existential threat." No; I said that when I traced claims of existential threat from climate change back to their source, the trail always led back to the IPCC, and the latest IPCC summary report didn't mention anything remotely close to an existential threat to humans. This is yet another instance--the only source cited is the IPCC.

Noah Scales

I was writing about family planning, Phil, not killing people. if you want to communicate with me, you'll have to read what I write with more care. I was writing about family planning, and there am concerned about reducing conception, primarily, as opposed to providing, for example, abortion services. If you understand what family planning is, you'll recognize that it is not genocide.

MHR

I think both you and oivavoi would benefit from reading John Halstead's report on climate change, or at least the executive summary. I think you're somewhat understating the tail risks associated with climate change, while I think oivavoi is not giving EAs enough credit for the nuance of their views on the subject (I think the standard EA view, expressed by e.g. Will MacAskill, is that climate change is a serious problem and important to stop, but it's less neglected than many other similarly-serious or even more serious problems, so is probably not the #1 priority for EA to be working on).

philgoetz

Thanks for the link to Halstead's report! I can't be understating the tail risks, because I made no claims about whether global warming poses existential risks. I wrote only that the IPCC's latest synthesis report didn't say that it does. I thought that climate change obviously poses some existential risk, but probably not enough to merit the panic about it. Though Halstead's report that you linked explicitly says not just that there's no evidence of existential risk, but that his work gives evidence there is insignificant existential risk. I wouldn't conclude "there is insignificant existential risk", but it appears that risk lies more in "we overlooked something" than in evidence found. The only thing I was confident of was that some people, including a member of Congress, incited panic by saying global warming was an imminent thread to the survival of humanity, and the citation chain led me back to that IPCC report, and nothing in it supported that claim.

MHR

Okay I guess you're correct, your comment wasn't stating your views, just the contents of the IPCC report. I 100% agree with your reading of Halstead's report -he's very explicit that there's evidence against climate change being an existential risk. I still think your original comment somewhat downplays the tail risk scenarios that are still considered plausible (e.g. from the tipping points section of Halstead's report), but I agree that those aren't actually likely extinction risks. I think in general you and I are probably on the same page overall about climate risk and the extent to which we should be working on it in EA.

Matt Goodman1y18

What do you mean by:

"downplaying engaging in politics in order to make societal institutions better and more just"?

I can interpret it a couple of ways:

Criticism that EA doesn't engage in politics enough
Warning about the risks of getting involved in politics

Either way, SBF was a major political donor. I'm reading he was the 2nd biggest donor for the Democrats:

https://www.google.com/amp/s/fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-biden-democratic-party-second-biggest-donor/amp/

oivavoi

Thanks for asking me to clarify. What I meant was the first, criticism that EA doesn't engage enough in politics - or rather with societal structures which affect both individual lives and our common future. I'm fully aware that SBF was a big political donor. So this was more about the general EA community. Think of it this way: One of the biggest feathers in EA's cap is that EA was concerned with pandemics and pandemic preparedness way before most people. Including me, I was way off on that. So hats off for that. But during the pandemic I didn't hear much noise from the EA community concerning patent waivers, for example - which could arguably have saved a lot of lives. There may be good reasons to abstain from politics, of course - it's inherently uncertain and without clear cut answers. Whereas I feel very confident saying that it was an incredibly dumb move to go all in on crypto, I know that there are possible counter arguments concerning the long-term effect of patent waivers (even though I'm not convinced by the counter arguments). But that uncertainty and underdetermancy applies just as much to future AI, no?

Matt Goodman

Interesting you say that. I was involved in an EA group that looked into campaigning for vaccine patent relief during COVID. There was the 'One day sooner ' campaign to allow human challenge trials (I believe this was EA aligned). There was an EA campaign against cuts to the UK's foreign aid budget, and I can think of two similar efforts in other countries (I'm currently writing this on mobile, it's hard to post links). Then there's the whole animal welfare side to EA, which is distinctly 'political', running campaigns for stricter animal welfare laws and suing to uphold these laws. I don't think EA is anywhere near as apolitical as you claim it to be. All that being said, these are all political campaigns focused on specific issues. I wouldn't think the marginal benefit of just donating to a major political party is anywhere near as good as these examples.

oivavoi

Thanks, that's great to hear. I definitely stand corrected on the vaccine issue then!

Noah Scales

You make some interesting points. Regarding your idea of intellectual self-licensing: * I've noticed public arguments and claims are done with (lazy) deference to perceived experts. The community puts unwarranted confidence in credentials and other typical evidence of expertise. Controversies (for example, timing of tipping points in climate change) simply let EA people choose the side they agree with. They can still cherry pick or misquote. Understanding of fundamentals goes ignored. * despite most arguments being accessible on their (lack of) merits, deference is taken as reason to adopt or reject arguments rather than relying on direct analysis of arguments as reasons to adopt or reject them. I've seen this over and over on the forum. "So and so says differently, and I trust so and so, therefore you're wrong." That's not arguing. That's just deferring. I guess people are too busy to study up? * EA folks are encouraged to hedge their claims with a probability. This is interesting when genuine uncertainty (and plenty of background information) exists, but for less plausible claims, it suggests less reason to make a claim in the first place. "I see a 0.002% chance of us dying from atmospheric oxygen loss someday, and I thought I'd mention it". Hm, that's a fun conversation starter, but not a serious claim. There's no argument that must be made, yet the claim, if it turns out true, has existential significance. That offers plenty of wiggle room for conversation, but none of the accountability of making an important claim. The result is that, baring other factors (such as industry support), deeper discussion doesn't happen, no one studies up, because the claim is "so unlikely." It makes more sense to me to treat contingent claims (no matter how weird) as important in their own right, regardless of probability, but also make clear what the contingencies are, so that typical assumptions about conversation topics (ie, that they apply to the world now), are not made.

oivavoi

Excellent points, agree completely!

4[anonymous]1y

I couldn't agree more. >"Still, it has seemed really obvious that these things are both bad and stupid: cozying up to a billionaire who set up shop in a tax haven and became rich on an unsustainable industry which doesn't provide real value to anybody... This has, frankly, been blatantly obvious to most of the "rational & progressive" people outside EA." I am not not an effective altruist. Yet I have often found myself in the position of defending the movement because its extremely atypical view of the dangers of AGI, its obsequious reliance on the ultra-wealthy, and its blindness to the existence of society and politics, have made it into a punch line among most people with 'progressive' views. It is not that crypto doesn't provide use value to anyone, it's that: 1. Its main use case is money laundering and circumventing international sanctions 2. It draws vulnerable retail investors into destructive boom and bust cycles 3. It uses huge amounts of (largely fossil-powered) electricity 4. It tries to place finance beyond the reach of regulation, taxation and enforcement In my view crypto is wildly net negative, and negative in certain respects (4) which give it more than an incidental relationship to criminality.

Jitse Goutbeek

I do think there is something here, while I do not agree with everything taking away the lesson that we should think more about power and how to prevent it from being concentrated seems good. If you look at what EA has written it is clear that what SBF did was against almost everything that has been said about how to do good (do not do harm, ends don't justify the means, act with integrity and in accordance with common-sense altruism). However, he was originally inspired by EA, and might have started out following the principles but when things went sour abandoned them. It is common psychological knowledgde that power tends to corrupt, so in a sense him not just conceding power when and thinking 'a hit and a miss' might not be that unexpected. In this sense instead of writing better advices of what to do when you have a lot of power (either political or wealth) me might need to focus more on making sure power is not concentrated in the first place.

Sarah Levin1y18

Historical nitpick: Schindler ran a Nazi munitions factory, but did not actually produce functioning shells. He delivered duds, and on a few occasions bought working shells from other factories to deliver to the Nazis in order to deflect suspicion, but AFAIK was careful not to actually increase the counterfactual supply of Nazi weapons.

This does not affect your argument, since Schindler obviously did many other things that would be "morally dodgy" in normal circumstances, like fraud and bribery and buying chattel.

Sharmake

Do you mean immoral?

David Mathers

Of course! Thanks for catching that! Fixed by edit.

Sam Elder1y60

It is good that you and the rest of prominent EA leaders are adopting this stance now, at least preferable to doubling down or even focusing exclusively on our ignorance with a "wait and see" attitude.

But Rob, respectfully, we also have questions.

Given the scope of its audience and the apparently extensive preparation and effort you advertise that it takes, your 80k interview with SBF both presented him in a very favorable light and, at least in retrospect, was a huge missed opportunity for us as a community to ask questions that could have raised red flags.

For that interview, were there any topics that were considered off-limits? Given the hesitance you express, at least in this post, about crypto in general, did you consider asking any difficult questions about FTX's business? At the time, were you aware of the continued Alameda-FTX connection and "open secret" that they were self-trading?

What thinking influenced the overwhelmingly positive "let's all learn from SBF's example" framing that you brought to the interview? What about SBF's business career in crypto, seemed admirable to you beyond his philanthropy and (now known to be illusory) success? Did anyone on staff who is even... (read more)

DaneelO1y23

I would also like to add the things expressed in this comment:

"Sam sleeps on a bean bag" and "Sam drives a Corolla" when I was quite confident that they knew that Sam was living in one of the most expensive and lavish properties in the Bahamas and was definitely not living a very frugal livestyle.

If this is true it would not be hard to fact check since many EAs knew SBF, and I got the impression from the interview that Rob knew SBF too. I don't know anything about the situation so I don't know what is true. All I know is that the episode gave me a very good impression of SBF and probably helped him build a good image among EAs.

Rebecca1y17

My (very weak) understanding is that both were true - he lived in a very expensive place in the Bahamas, where he had at least several housemates, and he usually slept on a couch, bean bag etc rather than a bed.

I guess similar to Warren Buffett - people always tout that he drives a crappy old car, which appears to be true, but, like, he also has a private jet!

DaneelO

Thanks for clarifying. That makes it more nuanced. Then it seems like the statements were true but perhaps misleading.

Rebecca

Yeah agreed re true but somewhat misleading

samuel1y33

I was honestly surprised how quickly SBF was "platformed" by EA (but not actually surprised, he was a billionaire shoveling money in EA's direction). One day I looked up and he was everywhere. On every podcast I follow, fellow EAs quoting him, one EA told me how much they wanted to meet his brother... it felt unearned/uncanny. For me, a main takeaway is that the community should be more cautious about the partners that it aligns with and also create a more resilient infrastructure to mitigate blowback when this stuff happens (it'll happen again, it always does with wealthy donors). When the major consultancies recently started getting flack for unsavory clients, they spun up teams to assess the ethical aspect of contracts and started turning down business that didn't align with certain standards.

FYI I'm not a "de-platforming" person, just felt like SBF immediately became a highly visible EA figure for no good reason beyond $$$.

Wei Dai1y33

just felt like SBF immediately became a highly visible EA figure for no good reason beyond $$$.

Not exactly. From Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too:

It was his fellow Thetans who introduced SBF to EA and then to MacAskill, who was, at that point, still virtually unknown. MacAskill was visiting MIT in search of volunteers willing to sign on to his earn-to-give program. At a café table in Cambridge, Massachusetts, MacAskill laid out his idea as if it were a business plan: a strategic investment with a return measured in human lives. The opportunity was big, MacAskill argued, because, in the developing world, life was still unconscionably cheap. Just do the math: At $2,000 per life, a million dollars could save 500 people, a billion could save half a million, and, by extension, a trillion could theoretically save half a billion humans from a miserable death.
MacAskill couldn’t have hoped for a better recruit. Not only was SBF raised in the Bay Area as a utilitarian, but he’d already been inspired by Peter Singer to take moral action. During his freshman year, SBF went vegan and organized a campaign against factory farming. As a junior, he was wondering

... (read more)

samuel

Thanks for the feedback, I appreciate it! SBF has clearly been interested in EA for a long time, but taking him seriously as a thought leader is pretty new. @donychristie mentioned that he was an early poster child of earning-to-give, which I also vaguely remember, but his elevation in status is a recent phenomenon. Regardless, my main point is that EA should be sensitive to the reputation of its funders. Stuff like this feels off even if it may come from a well-intentioned place.

Jeff Kaufman

I think the main early poster child was Jason Trigg, with the Join Wall Street Save the World (2013). I responded to Dony below, but I don't think Sam was prominent on 80k in the 2014-2016 era?

He was platformed prominently on the 80K website in like 2014-2016 ( my memory's hazy) for working at Jane Street. He was the poster child of earning-to-give.

Jeff Kaufman1y14

I don't remember him on 80k then, and looking at the Internet Archive he seems to have been added to the page on earning to give in May or June 2021:

2015-07-22 no

2017-04-23 no

2019-04-28 no

2020-07-30 no

2021-01-26 no

2021-04-06 no

2021-05-16 no

2021-06-07 yes

2021-06-18 yes

2021-08-09 yes

DC1y19

Here he is right on the homepage, 2015, the only earn-to-give profile of the three highlighted, and it links to his profile, "last updated October 25th, 2014".

Jeff Kaufman

Thanks for finding that! I was looking in the wrong place. I wish there was some kind of search for the archive...

projectionconfusion

Agreed. Its entirely possible to take someone's money and spend it for good causes without promoting them and associating ones reputation with them

[anonymous]1y33

I also feel appalled. Thanks for sharing this.

Geoffrey Miller1y20

Rob - thanks for a very reasonable take. Well written. Feeling appalled about FTX seems fully warranted, given the information we have so far.

To nitpick one point: I'm less skeptical about crypto in general. In terms of fraud detection, I think the public nature of blockchain ledgers and the traceability of tokens and addresses arguably helped to catch the FTX fraud (as it seems to have been) earlier than it might have otherwise been caught in traditional finance context. (IIRC, the initial reports that alerted CZ at Binance to FTX/Alameda problems were based on analyzing on-chain data, i.e. details of the public ledgers for various crypto protocols.)

Some centralized exchanges such as Kraken already do regular 'proof of reserves' audits that prove the status of investor deposits (which would have prevented the FTX crisis). Many other exchanges, including Binance, have committed this week to adopting proof-of-reserves systems soon. Oracle protocols such as Chainlink should soon allow proof-of-reserves systems for exchanges to operate continuously, in real time, rather than just a few times a year.

Long story short, blockchain technology involves public ledgers that, in principl... (read more)

Jeff A

Fair point. I understand OP’s post was more of a vent (mine coming soon), but he should’ve expanded more of his reason and evidence for calling blockchain a “Ponzi scheme.” (Side note: By no means am I a one of these “crypto bros.” I have as little money invested in it as you’d expect any other average Hispanic son of immigrants and recent community college graduate would. I’d say I’m neutral when it comes to crypto.)

Robert_Wiblin1y14

I did not call blockchain a Ponzi scheme (though some Ponzi schemes have been operated there I'm sure).

I said some others are saying it's a Ponzi scheme at heart, while I "am pretty skeptical of crypto having many productive applications."

Jeff A

You said, “ Some people are saying this is no surprise, as all of crypto was a Ponzi scheme from the start.” if you’re willing enough to post other people’s opinions, then you agree with it to an extent. And then you further try to support this connotation of crypto and Ponzi scheme by saying “some Ponzi schemes have been operated there I’m sure.” As stated earlier, I’m not taking sides on if crypto is a net good or net bad, but let’s be honest and straightforward on our said statements. And not try to redefine our noted statements to save face.

-15

Sabs

Peter Wildeford1y19

I'm also appalled. Thank you.

[anonymous]1y14

Thank you.
Great that this is coming from senior people in key EA orgs.
Looking at the forum yesterday, there seemed to be a risk that attempts to say plain truths or try to derive hard lessons from this whole episode would be discouraged by the community and dismissed as out-group attacks (as reflected in the general pattern of disagreement votes). This is sending the right message.
It is OK to be outraged at what went on.
It is OK to own up to mistakes.
It is OK to learn whatever needs to be learned from this, regardless of how much it hurts preconceptions.

A lot more thinking will be required but this is a good place to start.

A few initial, tentative reflections:

1) my charitable interpretation as a noninitiate is that betting on SBF was a swing for the fences, "the best we could get", and that the closest counterfactual was not a robust portfolio of equal funding value, but much lower funding value altogether. Many others, with the same objectives and armed with the same information, might've made the same calls based on the positive upside

2) nonetheless, it is true that crypto is a highly volatile and speculative sector, where it is easy to get burned by unscrupulou... (read more)

tamgent1y11

Some people are saying this is no surprise, as all of crypto was a Ponzi scheme from the start.

Earlier this year when it went semi-viral I watched 'The Line Goes Up', which I found pretty educational (as an outsider). Despite the title, it's about more than NFTs, and covers crypto/blockchain/DLT/so-called 'web3' stuff. It is a critical/skeptical take on the whole space with lots of good arguments (in my view).

tamgent1y11

Are people downvoting because they believe this not relevant enough to the FTX scandal? I understand it is only tangentially relevant (ie. FTX abused its customers money, they did not start a ponzi scheme). Or maybe because it is insensitive or wrong to share critical pieces of the wider area at a time like this in case people's emotions about the event get overgeneralised to related wider debates? If people disagreed with my view that the video has good arguments or is educational, they would have disagree-voted instead. My intention in sharing it was that, as someone who doesn't know much about crypto, watching this video helped me to understand some things about some of the wider claims that I had heard made. I thought that if there were people in a similar position of not knowing much, it could be helpful. Additionally, I thought that at a time of reflection and reckoning, a healthy dose of reviewing the more skeptical material is worthwhile, and this came to mind. It feels silly to be justifying simply sharing a video - but I actually just happened to be reading this thread which made me feel like it was worth asking downvoters to double check if they'd be willing to explain their reason for downvoting (I don't feel too personally upset about it, but do feel a bit of concern about community voting norms).

alexflint1y8

Making risky trades with depositors’ funds without telling them is grossly immoral.

Is it? Lending out depositor's funds is standard operating procedure in regular banking. Is it really "grossly immoral" to do the same thing in crypto without telling depositors?

FTX has been accused of much more than just lending out depositor's funds, but if there was fraud, I don't think it was in the mere fact of lending out depositor's funds.

Neel Nanda1y42

My understanding is that the FTX terms of use explicitly said customer funds would not be lent out? I agree that in fractional reserve banking, it's conventional that banks do this, but FTX was an exchange not a bank.

Zach Furman1y16

And, as an exchange, it had none of the government-backed insurance that makes it safe for banks to loan money like that without risk to customers.

Fods12

"Is it really "grossly immoral" to do the same thing in crypto without telling depositors?" Yes

3[anonymous]1y

This is a common myth. Banks don't lend out deposited money. Their business model is not taking that money, loaning it out at a higher interest rate than they pay depositors, and living off the difference. Rather, when they lend out credit they create, on their books, a liability (the funds they are lending to the client), and an asset (the client's future payments to them). The liability, the outflow, is a bookkeeping fiction. It is not the transfer of cash deposits. In this sense loans create deposits, not the other way round.

dyj346501y1

One data point on SBF being pretty honest on how crypto is too close for comfort to Ponzi scheme.

Jordan Arel1y1

😢 so incredibly sad. I’m definitely in shock as well.

I’m more optimistic on crypto generally, but this is so much what the crypto ethic was meant to stand against; non-transparency & too -big-to-fail mega billionaires ruining people’s lives.

I agree, I hope we can be much more cautious in the future.

Danny Donabedi1y-2

Robert, I wish to understand. At any time did 80,000 recommend readers or EAs to invest their savings in FTX crypto?

If memory serves right, there was an official 80,000 post composed by Benjamin Todd that recommended asset diversification away from what was regarded as the current EA investment portfolio, which was described as being highly tilted towards Facebook and FTX, and decentralized finance and big U.S. tech companies. In hindsight, it was optimal advice and I hope EAs listened to it.

However, by sheer virtue of associating the EA portfo... (read more)

Sabs1y58

so hang on, 8k Hours gave some really really good financial advice and you're trying to critique them because giving the good advice may have subconsciously influenced some people to do the opposite???

jesus, that's a bit harsh

Danny Donabedi

I’m not critiquing them. I’m sharing what I know was said and am asking for increased transparency on what other financial advice was provided. That’s it. Do you take fault with that? I don’t know you are trying to paint me as the ‘bad guy’ here. If you wish to defend the financial advice provided by 80k, you are free to do so. As my initial comment plainly stated, I don’t know how they came to the conclusion as to what the mainstream EA investment portfolio looked like. I applauded them for promoting diversification, but was skeptical of their forecasts on FB/FTX returns. I don’t know on what basis, evidence, or reasoning they made those forecasts. I’d demand the same from my stockbroker if he made those same statements. It’s valuable to be strict, even at the risk of being called harsh. My comment and my inquiry is in line with EA consequentialism. There are always consequences, foreseen and unforeseen, for putting out statements and recommendations. It may seem marginal to you, but people’s savings are at stake and 80k has earned a spot as of influencer for their reliable work. But no group is flawless and it is important to identify mistakes.

Sabs1y35

dude you've misunderstood what the 8k Hours piece was saying. It wasn't saying that the median EA's individual investment portfolio was overweight FB and FTX. It was saying that EA collectively was hugely overweight FB and FTX, which yeah, duh, it absolutely was because Dustin M and SBF - the two main zillionaire funders - were massively overweight those two things. Obviously if you're working in EA don't really want to be massively long the same two things that the people who ultimately pay your salary are long, because if things go south you both lose your job (potentially) AND the value of your personal investment portfolio drops like a rock. So diversifying is both good for you as an individual and good for EA collectively because then collective EA wealth is at least very slightly more diversified.

Danny Donabedi

I understand, but I never said that diversification wasn’t good. Again, I commended the recommendation for diversification. My error was thinking it was a claim about the median EA portfolio. My apologies.That said, the rest of my post still stands uncorrected. I should not be downvoted nor silenced to inquire if 80k (and others) provided financial advice that later proved catastrophic. 80k provided all sorts of awesome advice but is responsible enough to look back and identify where things were off the mark. This is important to prevent future errors of this scale. I’m just asking and inquiring, rather than accusing. That’s why I asked Robert if it was the case. It may not be. There should be no harm or censuring in asking, but apparently I was wrong. There were some financial predictions made about future returns, amidst a backdrop of optimism, and the worst possible outcome wasn’t considered and there was no warning. Most of the time this isn’t an issue. This time it was. Elsewhere on the sight, SBF (via FTX) was the prime example of how to earn to give. Now a new paragon is needed for that strategy. As Robert himself wrote, people were too quick to trust. Today the optimal strategy influential figures have adopted is to distance themselves from SBF’s projects. I don’t blame them for this. Wouldn’t you do the same? But there are lessons that need to be learned .

[anonymous]1y-10

[anonymous]1y-14