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.
New investors' money pays previous investors whenever someone buys Ethereum from someone else. That's what buying crypto fundamentally is: a new investor is paying a previous investor.
How is this any different from buying stocks, or buying anything else for that matter. How does it make it a Ponzi? Where is the pyramid? Where is the insolvency?
It's happened many times already. The price of crypto collapses regularly, and then people who haven't learned the obvious lesson decide to "buy the dip".
All markets have crashes. Crypto has had some severe ones, and... (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.
How is this any different from buying stocks, or buying anything else for that matter. How does it make it a Ponzi? Where is the pyramid? Where is the insolvency?
All markets have crashes. Crypto has had some severe ones, and is high risk, sure; but it hasn't ever gone to 0 (like all actual Ponzi schemes always do eventually).
Crypto (or at least Ethereum) is part ownership of a technology. All investing is ultimately speculative, and all investments only have value because other people think they do and are willing to buy them for some price (money is a collective fiction etc).
Again, the the same can be said for all investments; crypto isn't special in this regard. Sounds like your problem is more with capitalism itself. Why hasn't all the money in the world been transferred to a few rich people already? Because rich people sometimes lose fortunes too! (And many have on crypto!) How do people ever become rich starting poor? Investing in speculative assets can be one way; and it has happened many times with crypto - if anything, I think crypto has disproportionally benefited relatively poor people, who got in before most people with already established fortunes. A lot of new money fortunes have been made in crypto (same also for people who bought Apple, Google and Amazon stock 20 years ago).