I’m not trying to take credit for my silent suspicion. One of the reasons the crypto industry is notorious is because of fraud. I think that’s a natural case a dedicated risk team could have considered if we’d had one.
I initially interpreted your comment as being only about things other than fraud. You’re right that “person makes a lot of money in crypto” probably boosts the base rate for fraud by more than 10x, so your point is great. I think a lot of people, myself included, thought “surely he wouldn’t do anything too blatant (despite crypto).”
Also, the point of risk management isn’t to identify, with confidence, what will happen. It almost certainly was not possible to predict FTX’s collapse, much less the possibility of fraud, with high confidence.
What we probably could have done is find ways to mitigate that risk. For example, it sounds possible that money disbursed from the Future Fund could be clawed back. Was there an appropriate mechanism by which we could have avoided disbursing money until we were sure that grantees could feel totally secure that this would not happen? In fact, is there a way this could be implemented at other grantmaking organizations?
Could we have put the brakes on incorporating FTX Future Fund as an EA-affiliated grantmaker until it had been around for a while?
There are probably prudent steps we could start taking in the future to mitigate such damages without having to be oracles.
Yeah but that’s different from fraud. I think a 99% crypto crash would’ve been a lot easier to handle. (While still being very disruptive for EA.)
I feel like the OP (“How could we have avoided this?”) is less about the collapse of pledged funding and more about fraud.
I’m not trying to take credit for my silent suspicion. One of the reasons the crypto industry is notorious is because of fraud. I think that’s a natural case a dedicated risk team could have considered if we’d had one.
Feel free to take credit for it!
I initially interpreted your comment as being only about things other than fraud. You’re right that “person makes a lot of money in crypto” probably boosts the base rate for fraud by more than 10x, so your point is great. I think a lot of people, myself included, thought “surely he wouldn’t do anything too blatant (despite crypto).”
Also, the point of risk management isn’t to identify, with confidence, what will happen. It almost certainly was not possible to predict FTX’s collapse, much less the possibility of fraud, with high confidence.
What we probably could have done is find ways to mitigate that risk. For example, it sounds possible that money disbursed from the Future Fund could be clawed back. Was there an appropriate mechanism by which we could have avoided disbursing money until we were sure that grantees could feel totally secure that this would not happen? In fact, is there a way this could be implemented at other grantmaking organizations?
Could we have put the brakes on incorporating FTX Future Fund as an EA-affiliated grantmaker until it had been around for a while?
There are probably prudent steps we could start taking in the future to mitigate such damages without having to be oracles.