I think this post is making some important points, though I think it's overstating the need for urgency. I agree it's very likely a good idea to try to avoid spending the FTX money that you've received, though if you have no choice (since e.g. you have unavoidable ongoing financial expenses and need time to arrange other sources of funding or pivot your organization), I think people should probably spend the money instead of fully shutting down their organization or defaulting on ongoing liabilities they have, which seems overall likely to cause greater harm than to keep operating for a few months until the situation clears up more (though I also think it's a good time to cut spending if you can, and therefore avoid spending the unspent FTX money).

I think it's a good idea to try to make sure that depositors get their money back, though I am not as confident as you seem to be that the clawback procedures are the best way to achieve that. I am currently holding out to see whether I expect the clawback procedures to actually result in an equitable outcome here, or whether we should expect some enormous fraction of the clawback amount to be spent on legal fees, or be siphoned off to e.g. the Bahamas government, or institutional investors beyond their initial investments, which seems pretty plausible to me, and which would make supporting the clawbacks itself a somewhat morally dubious act.

If the clawbacks turn out to be a pretty bad way to actually get money back into the hands of the depositors, then I would like us to spend a decent amount of time trying to figure out some better way to actually achieve that, so I am on board with the overall call for "actively supporting giving stolen money back to FTX depositors". 

Separately, I think it's also pretty unclear what fraction of the money that was given out by the Future Fund was actually stolen. It's plausible to me that via various clawback mechanisms (independently of the Future Fund) the vast majority of the funds that were lost to depositors will be recovered, and that only a fraction of the money given out by Future Fund should be modeled as stolen, and where e.g. the fair thing to do is for people to return 20% of the funds given to them by the Future Fund (like, as far as I can tell FTX and Alameda also made a bunch of money and produced a bunch of legitimate value, and in as much as everyone can end up even with only a fraction of the money returned, I think that's a fairer outcome). I have a ton of uncertainty on this, and expect we won't know for quite a while, though I think we should continue to actively try to reduce uncertainty on this as the bankruptcy proceedings go on. 

I sincerely care about doing right here, and I want us to seriously try to put depositors and debtors to FTX and Alameda back in the green, but I also think the facts of the situation are genuinely uncertain. 

Some other questions I have uncertainty about are: 

• From an accounting perspective, what fraction of FTX money has an organization actually spent if they e.g. received $1MM from FTX a year ago, had $3MM in the bank at the time, and now have $2MM left? (i.e. spent $2MM in the last year). Should they model none of the FTX money as spent? Should they model all of it as spent? Should they model 50% of it as spent? (my guess here is that they should model 50% of it as spent, though I think this approach has some inconsistencies that are a bit ugly, where e.g. if you break things down by month you might get a different answer)
• Should people try to invest the FTX money so that depositors can get more of their money back? Should they keep the interest on their money, or should they try to give it back to depositors? What if the clawbacks don't want the interest, should we somehow try to give it back anyway?
• What if the clawbacks happen, but they take money from other people, some of which seem like they had somewhat more right to the money than we think we do, but in a way that's pretty messy (e.g. they claw the funds back from other trading firms). Should we aim to somehow give money back to the trading firms? 
• Who should bear a lot of the financial burden of this situation? Should organizations that happened to be funded by FTX, but could have also been funded by other orgs, bear more of the burden than the ones that happened to be funded by other funders? What fraction of the burden should be covered by e.g. Open Phil who I don't think are much to blame for this situation, but sure are the obvious place that organizations will ask for money from in order to cover money they might want to return?

I think settling this issue will take many years, and I think I want us to put more emphasis on strapping in for the long haul and righting the wrongs that we might have been involved in, than immediate calls to action for people to do things right now. 

I also think it's a time a lot of people are paying attention to us, so I don't think it's a terrible time to make commitments to somehow do things right here, but I do have enough uncertainty about how to actually do that that I don't currently feel comfortable making any super precise and strong commitments besides a general "I will really try pretty hard to make things right somehow, even though I don't know how yet".

"I suggest also writing to the new FTX CEO to let him know the funds are being set aside in this way"

I worry that this could go badly wrong if an affected individual were to do this, in the following way:

(1) An affected grantee makes statements to FTX which imply that they believe all of the money that they were given rightfully belongs to FTX's creditors, or could be interpreted in court to imply this

(2) The bankruptcy trustee sends out their routine demand letter. The grantee, having set the money aside, originally thought that they could repay GRANT_SIZE - AMOUNT_SPENT. Unfortunately, their government has treated their grant as income, so they had or will have to pay taxes on the amount that they were unable to deduct. Also, if they aren't planning on trying to negotiate this settlement personally, they will need to enlist a lawyer, who will want their own chunk of any settlement. So they have to hope that the trustee will settle for (GRANT_SIZE - AMOUNT_SPENT - TAXES_OWED - LAWYER'S_FEES), as they will face financial ruin otherwise.

(3) The bankruptcy trustee, who might otherwise have been perfectly happy to settle for that amount, thinks they can do better, because they have the statement that grantee provided in (1) to wave around in court.  Grantee has a much harder time arguing in court that they do not legally and morally owe this creditor GRANT_SIZE, given that the bankruptcy trustee has a document in grantee's own words seeming to imply that grantee themselves believes they do legally and morally owe this amount. By the way, the creditor the bankruptcy trustee represents is not an original FTX retail or institutional investor at all, but is instead a Wall Street firm that has bought up FTX customers' bankruptcy rights for pennies on the dollar, looking to turn a profit: https://www.nytimes.com/2022/11/18/business/ftx-assets-wall-street.html  . In the end, the grantee might face bankruptcy.

The risks are clearest for individuals. Not sure to what degree an EA community statement similar to (1) would raise analogous risks for grantees or the community as a whole, I don't really have the legal background to know how such a statement might wind up being deployed in court.

Fully agree that just continuing on with some prior plan to deploy the funds seems like a bad idea.

Important notice to readers.  Please vote up even though it is not very carefully argued here, because it may be important to some readers to read it immediately.

DO NOT FOLLOW THIS POST'S ADVICE.  IT IS PROBABLY VERY BAD ADVICE FROM A LEGAL STANDPOINT.  IF IT DOESN'T GET YOU IN TROUBLE IT WILL ONLY BE BECAUSE PEOPLE IGNORED YOUR LETTERS.

NEVER FOLLOW ADVICE LIKE THIS FROM PEOPLE WHO ARE NOT LAWYERS.

ONLY DO ANYTHING REMOTELY LIKE THIS IF YOU READ A POST FROM OPEN PHILANTHROPY'S LEGAL COUNSEL TELLING YOU TO DO IT.

I think that on the specific legal questions around clawbacks, this seems super messy, and I expect the correct thing is to do nothing for now. Legal proceeding are not your friend! And I do not think that the standard norms of cooperation, clear communication and good faith clearly apply in a legal situation. Obviously, I think that people should fully obey the law and any results of legal proceedings, but I think that the ethical status of things here is unclear, and I am not comfortable deferring to a court to figure out the most equitable solution. There's a lot of messiness on the part of a money recipient (income tax on the money, legal fees, potentially covering living expenses, etc). And there's a lot of messiness around who would receive clawed back money - eg, I think that ethically a poor, uninformed creditor who invested in crypto because of FTX marketing and lost a lot of their net worth is far more deserving of renumeration than a hedge fund who deposited money on FTX, or a firm who loaned FTX money. But I expect that the legal status of who gets paid money back first/to what ratio is much less clear. And I expect that many of the larger orgs and actors who are owed money will be selling those claims to other financial firms (at a massive discount), and that any actually clawed back money will go to these other firms. Having the expectation that these claims are to be paid back more will give the creditors a higher price to sell the debt, but this is much fuzzier and more diffuse.

On the PR questions, this is unclear to me and I don't have strong takes.

On the ethical questions, I think that "money spent vs unspent" feels like the wrong distinction. To me, the core argument of Yudkowsky's post was that non-profits are not some fundamentally different category to standard capitalism. Either way, you are selling a service, just that in a non-profit situation the goal is for value to go to the world. Pretty much everyone who works for a non-profit could have worked in a standard role instead, and I don't think that choosing to work for a non-profit should significantly change their rights to their labour here. (Similar arguments apply to academics, individuals, for-profits, etc who received FTX money).

If someone received money for work they have since done, but they had enough savings that they didn't actually "spend" any of the money, it just went to savings. But I don't think they have an obligation to return this, in the same way that an FTX caterer with significant runway and significant profit margins is obliged to return the money.

If you interpret unspent funds as payment for labour that has not yet been done, this is less clear to me. But I expect most people in this situation to continue to do the task they had been paid for, which makes it feel analogous to the above - if an academic lab received a grant to work on a research project, I think it is unreasonable to expect them to stop working on that project and to set aside all of the money.

To be clear, I agree that what FTX did was morally reprehensible! But I think this is a confusing and messy situation ethically, and want to push back on a framing that non-profit work is fundamentally different from people selling their labout.

(Disclosure: I was doing independent research on a FTX grant, though for the most part did not receive the money even for research I had already done)

Thanks for sharing this. I think a good bit of this depends on further factual development -- mainly figuring out when FTX became insolvent. If everything was OK at FTX when a transfer was made, I don't think the grantee has any ethical obligations because FTX ran aground later.

From a rule utilitarian approach, it is rather undesirable for insolvent debtors to be allowed to preference their preferred charities over their legitimate creditors. Credit and insolvency are significant parts of modern economic life, and honoring the reasonable expectations of creditors is an important part of growing the economic pie for everyone. Creditors come in all shapes -- from the employee who has performed work but hasn't been paid yet, to the supplier whose invoice you haven't paid yet, to someone who got burned when the toaster you manufactured blew up due to a manufacturing defect. To the extent a business or individual can get away with just dumping money to a charity at the cost of their creditors, it is going to be a lot harder for businesses and individuals to access credit (which is an oil that makes the economic system run). That is an undesirable state for everyone (including charities which are dependent on corporate donations).

To give two simpler examples:

• John's restaurant is not doing well and will likely have to liquidate sooner or later. John would prefer that money end up in the pockets of his church rather than in the pockets of his lender, his suppliers, and his employees. So he decides to have his business keep making -- or even increase -- donations to his church rather than manage his business cashflow in a way that honors his commitment to his lender, his suppliers, and his employees as best his restaurant can with its assets.
• Jane is driving negligently and inflicts disabiling injuries on a law firm partner. Like most people, Jane doesn't carry enough insurance to cover decades of lost wages for . . . anyone, much less a law firm partner. Jane decides that she would rather her assets end up in the pockets of her alma mater (whose football team she absolutely adores) rather than the person she ran over. 

Unfortunately, I don't think there is any way to effectively prevent creditor-screwing charitable transfers other than a system of clawback liability. Experience teaches us that requiring proof of an actual intent to defraud creditors allows a lot of problematic transfers to stand. The corporate executives should have known that the corporation was insolvent -- and making charitable donations while insolvent is itself a problematic behavior even if there is no affirmative intent to defraud (as it may prove to have been the creditors' money the executive was handing out). Thus, applying the clawback rule to generally all corporations that were insolvent at the time of charitable transfer makes sense.

The bankrupt corporation is dead -- it will either be carved up (liquidation) or sold as a going concern for the benefit of the creditors (reorganization). If you saddle the reorganized corporation with liability for the old corporation's misdeeds, you merely reduce the amount the reorganized corporation can be sold for by that amount (which defeats the purpose of selling it). So "punish FTX for making inappropriate charitable transfers" is not a viable option. 

You could argue for a system of personally punishing the corporate officials who approved the charitable transfers while the corporation was insolvent . . . but everyone is worse off under that scenario (corporate officials will be too conservative if they fear facing personal liability for erroneous corporate decisions, meaning they will err strongly on the side of never approving charitable transfers). 

Since neither of these options is viable, I don't see any other way to sufficiently discourage these kinds of transfers other than clawing them back from the charities.

"    You can't make any progress on the problems you care about without strong, practical organisations full of people working together in predictable ways. And those organisations will need to be part of a wider coalition. You need to be trustworthy.     "

Great points. This event should help movements including effective altruism, longermism, and those focused on a flourishing future grow and mature. FTX has served as a lightning strike, jolting a community of bright-eyed optimists into a real world of tradeoffs and consequences. 

Long term, this might spearhead a valuable transition into integrating with the 'real world' a bit more more. Further integrating with businesses, across disciplines, and government will require breadth of perspective. Self-referential and insular communities, such as the organization that runs this blog, will benefit from reflection and further integration with the >99% of the world with minimal understanding of EA principles. 

'     We all need to live in a society --- there's very little utility to be found in the state of nature. In order to live in a society we have to agree to cooperate with each other, and agree to withdraw our cooperation from, or even actively punish, defectors. Naive act utilitarianism simply isn't compatible with this. Individuals can't be expected to agree on individual act-based decisions, and you can't form a coalition with people who are making it up as they go along. 

A basic respect for property rights is a good ethical rule, that we will all be much worse off without. Support for earning to give in no way entails support for stealing to give. 

There are lots of situations, either constructed or actually occurring, where it's unclear how to reason about the priority of different rules or policies. The actions of SBF are not any sort of boundary case. You can't run a society where it's okay for your trading partner to abruptly decide it would be better for the world if your goods were sent elsewhere.     '

In this specific case, the majority of recoverable funds should naturally be restored to customers. The world is a bit more grey. Governments tax and allocate a significant portion of GDP and worldwide resources. Property rights, corporate power, and overall influence vary significantly across many of the world's biggest economies. 
 

When it comes to the double edged sword of technological development, and the associated existential risks that could wipe out significant swaths of observable sentient life, our modern conception of just property rights may need to evolve alongside the commensurate risks. As technology has rapidly expanded and accelerated, so have threat vectors and risks. 

Hopefully this crisis will prove a valuable opportunity to strengthen and grow  as we trod forward.