Yes, I think that money should be returned beyond the amount that you would settle upon. As I wrote in the post:
it is only through quirks of the legal process that EA and rationalist orgs have been able to keep so much of the money.
In most cases, the outcomes of that legal process seem acceptable, but not in this case of Manifold:
The point is, what’s fair for Lightcone and other orgs is not what’s fair for you. The bar is higher for you now, if you want to pay Caroline even one dollar.
Basically, I believe that there is a legal debt and a functional debt. The legal debt, by definition, is whatever settlement competent lawyers arrive at. The functional debt is generally greater. For most EA orgs, it would feel fine to write off the functional debt in exchange for some gratitude toward the system and some soberness around the facts and lessons of FTX. But in your case, it would be best for you to settle the difference, lest you end up paying Caroline with what is functionally FTX money.
So for example, if Manifold/Manifund were to return $200k of the $500 through a legal settlement, then it would make sense to pay an extra $300k voluntarily if you want to employ Caroline (and retroactively, Nishad). This would resolve the conflict of interest, in my mind.
(I do see Nishad named in one of the FTX estate's filings, and perhaps they will also press the issue of Caroline when they find out. This may move the needle towards a fuller recovery, but still seems unlikely to hit the full $500k, and I think you should make up the functional difference.)
Mechanically, I do not know whether your eventual settlement will itemize the breakdown of the $508k separately from the $1m, but you get the general idea.
Separately, there are other mechanical steps I do not understand here, e.g. when you write
I am mostly considering whether I should make a large personal donation to Manifund to help resolve the lawsuit.
that seems like it's the first of two steps. First, your money goes into Manifund, and second, the money somehow goes from Manifund to the FTX estate. I do see that Manifund has been added as a defendant alongside Manifold. But are you imagining that this money gets held in some designated account at Manifund until the case is settled and you have clearer instructions on payment?
There are other technical points that are not clear to me, but I'm sure there's a way for these details to all make sense.
I wouldn't approach it the same way in most cases. The majority of orgs in the ecosystem are not paying forward money to one of the same culprits who stole it. My logic in that section is also more stringent than what was applied to the politicians, celebrities, and other non-EA outflows from FTX.
From the outside, I really don't mind it that most EA orgs followed the legal process to its conclusion, as is their right. You can count it in the column of EAs acting like normal people for once, which is always welcome. If everybody in all the different outflow categories (both EA and not) pushes back in court, and everybody ends up repaying some but not all of what they got from FTX, then that's the system at work and there's a certain justice to it.
(The politicians didn't pay anything back, if my memory serves me. They just made some small payments to generic charities. But what are you gonna do.)
So yeah, the only reason I'm calling for a voluntary repayment beyond the legal process in this case is because of the highly nonstandard hiring of Caroline (and Nishad) at Manifund and the quid pro quo it implies.
Thank you for the forthcoming response. I would be interested in seeing the private letter you mentioned at an appropriate time. Let me register a few more thoughts here before I see it.
I don’t have a good sense of how the wider community would react, and obviously you’re not going to please everybody. But from my perspective, if you return $500k and you assuage some of the governance concerns that I mentioned here under “Further concerns in the case of Option 2”, it would go a long way.
Something I can’t predict is whether you would see holdouts who insist that you should return some or all of the $1M seed funding, too. If it helps, I could spell out in more detail why I decided not to push that point:
It has something to do with the complexity of equity, as I said in the post, as well as the number of parties who have a stake. The negotiations are still in-progress, and even without seeing the private letter I can guess that it’s thorny.
It probably also counts for something that the seed investment was made in early 2022 before the culprits necessarily knew how much user money they had stolen.
Even from the inside view, you won’t actually know for sure how much you have cleared from Manifold equity until some sort of liquidity event, and you would also have trouble personally repaying anything so large before that time.
All of this has been pretty messy to dig into, but as I attempt to reason through what is being under- or over-counted in the various interpretations of this story, I think $500k is a decent ballpark of your own excess “moral” debt to FTX beyond what will be legally reclaimed.
Moreover, I would say that on a practical level, the goal is to see you repay a meaningful amount of what FTX bestowed on you, to show that you recognize the conflict and want to fix it. By this approach, a reasonable amount would be a tangible hardship without ruining you – I’m aware that you have a young family and that some of your investments are illiquid. I think the $500k would meet that bar.
I will be in touch with you.
Yes, I think that money should be returned beyond the amount that you would settle upon. As I wrote in the post:
In most cases, the outcomes of that legal process seem acceptable, but not in this case of Manifold:
Basically, I believe that there is a legal debt and a functional debt. The legal debt, by definition, is whatever settlement competent lawyers arrive at. The functional debt is generally greater. For most EA orgs, it would feel fine to write off the functional debt in exchange for some gratitude toward the system and some soberness around the facts and lessons of FTX. But in your case, it would be best for you to settle the difference, lest you end up paying Caroline with what is functionally FTX money.
So for example, if Manifold/Manifund were to return $200k of the $500 through a legal settlement, then it would make sense to pay an extra $300k voluntarily if you want to employ Caroline (and retroactively, Nishad). This would resolve the conflict of interest, in my mind.
(I do see Nishad named in one of the FTX estate's filings, and perhaps they will also press the issue of Caroline when they find out. This may move the needle towards a fuller recovery, but still seems unlikely to hit the full $500k, and I think you should make up the functional difference.)
Mechanically, I do not know whether your eventual settlement will itemize the breakdown of the $508k separately from the $1m, but you get the general idea.
Separately, there are other mechanical steps I do not understand here, e.g. when you write
that seems like it's the first of two steps. First, your money goes into Manifund, and second, the money somehow goes from Manifund to the FTX estate. I do see that Manifund has been added as a defendant alongside Manifold. But are you imagining that this money gets held in some designated account at Manifund until the case is settled and you have clearer instructions on payment?
There are other technical points that are not clear to me, but I'm sure there's a way for these details to all make sense.
I wouldn't approach it the same way in most cases. The majority of orgs in the ecosystem are not paying forward money to one of the same culprits who stole it. My logic in that section is also more stringent than what was applied to the politicians, celebrities, and other non-EA outflows from FTX.
From the outside, I really don't mind it that most EA orgs followed the legal process to its conclusion, as is their right. You can count it in the column of EAs acting like normal people for once, which is always welcome. If everybody in all the different outflow categories (both EA and not) pushes back in court, and everybody ends up repaying some but not all of what they got from FTX, then that's the system at work and there's a certain justice to it.
(The politicians didn't pay anything back, if my memory serves me. They just made some small payments to generic charities. But what are you gonna do.)
So yeah, the only reason I'm calling for a voluntary repayment beyond the legal process in this case is because of the highly nonstandard hiring of Caroline (and Nishad) at Manifund and the quid pro quo it implies.
Does that help clarify at all?
Thank you for the forthcoming response. I would be interested in seeing the private letter you mentioned at an appropriate time. Let me register a few more thoughts here before I see it.
I don’t have a good sense of how the wider community would react, and obviously you’re not going to please everybody. But from my perspective, if you return $500k and you assuage some of the governance concerns that I mentioned here under “Further concerns in the case of Option 2”, it would go a long way.
Something I can’t predict is whether you would see holdouts who insist that you should return some or all of the $1M seed funding, too. If it helps, I could spell out in more detail why I decided not to push that point:
All of this has been pretty messy to dig into, but as I attempt to reason through what is being under- or over-counted in the various interpretations of this story, I think $500k is a decent ballpark of your own excess “moral” debt to FTX beyond what will be legally reclaimed.
Moreover, I would say that on a practical level, the goal is to see you repay a meaningful amount of what FTX bestowed on you, to show that you recognize the conflict and want to fix it. By this approach, a reasonable amount would be a tangible hardship without ruining you – I’m aware that you have a young family and that some of your investments are illiquid. I think the $500k would meet that bar.