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.
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)
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)
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)
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.
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)
Here's some information:
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... (read more)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
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:
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/
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.
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)
I would also like to add the things expressed in this comment:
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.
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!
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 $$$.
Not exactly. From Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too:
... (read more)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
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".
I also feel appalled. Thanks for sharing this.
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)
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."
I'm also appalled. Thank you.
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)
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).
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).
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.
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.
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.
One data point on SBF being pretty honest on how crypto is too close for comfort to Ponzi scheme.
😢 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.
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)
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
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.