12242 karmaJoined Nov 2022Working (15+ years)


I am an attorney in a public-sector position not associated with EA, although I cannot provide legal advice to anyone. My involvement with EA so far has been mostly limited so far to writing checks to GiveWell and other effective charities in the Global Health space, as well as some independent reading. I have occasionally read the forum and was looking for ideas for year-end giving when the whole FTX business exploded . . . 

How I can help others

As someone who isn't deep in EA culture (at least at the time of writing), I may be able to offer a perspective on how the broader group of people with sympathies toward EA ideas might react to certain things. I'll probably make some errors that would be obvious to other people, but sometimes a fresh set of eyes can help bring a different perspective.


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· 1y ago · 1m read


Topic contributions


I suspect the limiting factor on scalability here may be having people in-country who have the technical skills, access to information, and mindset to pull something like this off. I'm sure that saying no was excruciating. Potentially, one could scale (at some probable tradeoff for cost-effectiveness) after a while with algorithms. For instance, you might determine that providing transport and ancillary supports for moderate-to-severe malnutrition cases up to $150 is cost effective if the treatment was unlikely to happen otherwise.

Conditioned on who the likely donors are, I think using the GiveWell bar is too demanding. As you mentioned, this project hits the fuzzies hard. It's quite legible to non-EA donors: identifiable beneficiary with a story,[1] very understandable theory of change. The amounts at play are small enough that a donor who gives $50-$100 would feel like a significant part of potentially changing that child's life. This feels like an easy thing to share with people who are not EAs or even sympathetic to EA principles.

If the counterfactual is that the donor would have given the money to a big NGO, to almost any charity in their own country, or would have spent the money on non-charitable purposes, then the cost-effectiveness for this program would not need to be particularly high. So I'd be interested in hearing a little bit about cases number 4 through 6, which may give an idea of how much the cost-effectiveness might drop upon broader scope.

  1. ^

    In many cases, you'd need to fund the treatment out of reserve funds and fundraise retroactively, but I don't think that would be a major problem if transparently disclosed. Doesn't seem to hurt the disaster-relief charities' fundraising right after a natural disaster.

I'd caution everyone that discussions with peers would be potentially discoverable in litigation. I do not mean to imply the possibility of discovery is a sufficient reason not to have those discussions, but I think people do need to be aware.

If I were a smaller grantee, I'd be considering the possibility of seeking joint representation with similarly-situated individuals/entities, and perhaps giving the attorney permission to seek a aggregate settlement of all claims against those grantees. It's clear to me that the least desirable place for the monies to end up is in the pockets of lawyers -- either your own or the estate's. Off the top of my head, I'd be cautious about joint settlement involving people/orgs who (had significantly different grant sizes or atypical defenses) and wanted to pay as little as possible.

I want to be really careful not to give legal advice here, both for the usual reasons and because this is a complex multijurisdictional bankruptcy affair. 

I think I had the explainer written by Open Phil's outside counsel shortly after implosion in mind, but it doesn't contain a citation. 

This is definitely one of those cases where you should obtain legal advice (perhaps jointly with people in a similar situation) before giving the monies away. 

I suspect it will be a long time before we know "the FTX debtors are paid back," especially since so much of the asset base is highly volatile. Thankfully, interest rates are good at the moment, so you can ~preserve the power of the donation by putting the funds in short-term Treasuries (or equivalent) while you wait.

I'm rooting for the depositors here. Their deal with FTX was that they owned the assets in their accounts, so the increase in value of that crypto morally belongs to them. I don't even think "would have held their assets in crypto since the crash" is a prerequisite. SBF forced them to involuntarily bear the risk that their assets (once recovered and distributed) would be less than their November 2022 value, so the upside to that risk (post-November 2022 appreciation) belongs to them as well.

Simplifying, my general moral priority list for recoveries is vaguely like: depositors (up to their November 2022 values), non-investor unsecured creditors (e.g., trade creditors), depositors (up to FMV of their accounts at time of distribution), investor unsecured creditors (e.g., hedge funds), [1]innocent transferees (e.g., EA and political organizations), equity holders guilty of at most ordinary negligence (if any), forfeiture to the government,[2] recipients of sketchy transfers, including those who were paid way over FMV (e.g., those paid sky-high valuations for vaporware biotech firms), my fireplace, SBF and other insiders. 

  1. ^

    Lower because they had an opportunity and access to do due diligence, and assumed the risk. I am more sympathetic to vendors and other non-investment unsecured creditors than this group.

  2. ^

    Standing in the place of SBF, who morally deserves to forfeit any equity interest he might have. Only after all innocent parties have been fully compensated.


I’m more concerned with the community not engaging enough with the problems raised in the post.

Experience teaches that there are (at least) two types of postmortem analyses when something goes wrong: a type that is more focused on questions of blame, and one that is focused on root cause analysis / lessons learned / how to improve / etc. These types of inquiry struggle to coexist in the same conversation, because the former creates an adversarial tone regarding the persons against whom blame is being considered. 

Now, that is not to say that blame-focused inquiries are bad, and the other type is better as a matter of course. But the title and tone of your post placed this discussion clearly in the blame-focused camp, and it's hard for the non-blamey type of conservation to form out of such an environment. 

I suspect most community members felt that the proffered evidence does not sufficiently make out a case of deception (i.e., intentional misrepresentation) and are thus disinclined to participate in discussion of downstream philosophical issues that only come into play if they reach a conclusion that deception was present (vs. making a mistake).

If you're interested in learning more about the second type of analysis, I'd suggest reading more about just culture in fields like medicine and aviation. 

The main reason they are in a better position to pay is the massive increase in the value of crypto assets after filing vs. the proposal to pay out the value of customer holdings on the day of bankruptcy. That is irrelevant to whether they were solvent in November 2022.

Actually, the bankruptcy lawyers and other professionals get paid by the estate ahead of almost all unsecured claimants. Their claims are generally entitled to administrative expense priority. That priority exists because no sane lawyer or professional would agree to represent the bankrupt while accepting general unsecured creditor status (after all, they already know the debtor is insolvent!). The same is true of many other vendors and service providers who provide services to the estate after the bankruptcy petition is filed.

If everyone else had truly been made whole, equity holders are last in line to get the remainder. But I think the odds of SBF receiving a meaningful distribution here are ~zero; the bankruptcy judge would amend the reorg plan as necessary to prevent him from profiting from his crimes.

If I remember a report from Ray et al. correctly, there were a bunch of intertwined bank accounts. I believe some transactions were made from Alameda-owned accounts, some from North Dimension-owned accounts, etc. without much rhyme or reason.

A few quick observations written while not yet caffeinated:

  • I think this kind of thing happened in the Mt. Gox bankruptcy due to appreciation in crypto values after the filing.
  • Because there is a time limit for filing clawback claims, the estate needs to be file them even if it hopes it could be in a position to withdraw them later. Off the top of my head, that time limit is often two years after the filing of the bankruptcy case.
  • I believe that EA-related fraudulent conveyance ("clawback") claims are, by dollar amount, only a portion of the clawback or preference claims filed by the estate. At least early on in the case, these claims were expected to be in the billions. Some relate to SBF shadiness, like asset transfers to insiders, but I believe some related to arms-length commercial transactions that fall under the clawback/preference rules. So the estate can repay everyone after cashing in on clawback/preference claims does not imply that it could if those claims were refunded.
  • That the creditors may eventually be paid in full does not necessarily imply they will be made whole. 
    • First, it's not clear how the time value of money is factoring into FTX's statement. And final resolution is probably many years away. 
    • More significantly, at least as of December, the reorg plan was valuing customer crypto based on its value on the date of bankruptcy filing. So the customers would still be cheated out of their gains. Although I didn't check, I am guessing the value of FTT and maybe other crypto went down in the days before filing as a result of the unfolding FTX fiasco, so those FTX-caused losses would still be locked in for the customers under the plan.

I don't know UK tax law, but IIRC in the US selling unrelated ads in a program is a classic example of revenue usually subject to Unrelated Business Income Tax. If there is an analogous tax provision, that would affect the financial benefits.

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