A number of people have asked why there hasn’t been more communication around FTX. I’ll explain my own case here; I’m not speaking for others. The upshot is that, honestly, I still feel pretty clueless about what would have been the right decisions, in terms of communications, from both me and from others, including EV, over the course of the last year and a half. I do, strongly, feel like I misjudged how long everything would take, and I really wish I’d gotten myself into the mode of “this will all take years.”
Shortly after the collapse, I drafted a blog post and responses to comments on the Forum. I was also getting a lot of media requests, and I was somewhat sympathetic to the idea of doing podcasts about the collapse — defending EA in the face of the criticism it was getting. My personal legal advice was very opposed to speaking publicly, for reasons I didn’t wholly understand; the reasons were based on a general principle rather than anything to do with me, as they’ve seen a lot of people talk publicly about ongoing cases and it’s gone badly for them, in a variety of ways. (As I’ve learned more, I’ve come to see that this view has a lot of merit to it). I can’t remember EV’s view, though in general it was extremely cautious about communication at that time. I also got mixed comments on whether my Forum posts were even helpful; I haven’t re-read them recently, but I was in a pretty bad headspace at the time. Advisors said that by January things would be clearer. That didn’t seem like that long to wait, and I felt very aware of how little I knew.
The “time at which it’s ok to speak”, according to my advisors, kept getting pushed back. But by March I felt comfortable, personally, about speaking publicly. I had a blog post ready to go, but by this point the Mintz investigation (that is, the investigation that EV had commissioned) had gotten going. Mintz were very opposed to me speaking publicly. I think they said something like that my draft was right on the line where they’d consider resigning from running the investigation if I posted it. They thought the integrity of the investigation would be compromised if I posted, because my public statements might have tainted other witnesses in the investigation, or had a bearing on what they said to the investigators. EV generally wanted to follow Mintz’s view on this, but couldn’t share legal advice with me, so it was hard for me to develop my own sense of the costs and benefits of communicating.
By December, the Mintz report was fully finished and the bankruptcy settlement was completed. I was travelling (vacation and work) over December and January, and aimed to record podcasts on FTX in February. That got delayed by a month because of Sam Harris’s schedule, so they got recorded in March.
It’s still the case that talking about this feels like walking through a minefield. There’s still a real risk of causing unjustified and unfair lawsuits against me or other people or organisations, which, even if frivolous, can impose major financial costs and lasting reputational damage. Other relevant people also don’t want to talk about the topic, even if just for their own sanity, and I don’t want to force their hand. In my own case, thinking and talking about this topic feels like fingering an open wound, so I’m sympathetic to their decision.
I’ve had quite a few disagreements with other EA’s about this, but I will repeat it here, and maybe get more downvotes. But I’ve worked for 20 years in a multinational and I know how companies deal with potential reputational damage, and I think we need to at least ask ourselves if it would be wise for us to do differently.
EA is part of a real world which isn’t necessarily fair and logical. Our reputation in this real world is vitally important to the good work we plan to do—it impacts our ability to get donations, to carry out projects, to influence policy.
We all believe we’re willing to make sacrifices to help EA succeed.
Here’s the hard part: Sometimes the sacrifice we have to make is to go against our own natural desire to do what feels right.
It feels right that Will and other people from EA should make public statements about how bad we feel about FTX and how we’ll try to do better in future and so on.
But the legal advice Will got was correct, and was also what was best for EA.
There was zero chance that the FTX scandal could reflect positively on EA. But there were steps Will and others could take to minimise the damage to the EA movement.
The most important of these is to distance ourselves from the crimes that SBF committed. He committed those crimes. Not EA. Not Will. SBF caused massive harm to EA and to Will.
I see a lot of EA’s soul-searching and asking what we could have done differently. Which is good in a way. But we need to be very careful. Admitting that we (EA movement) should have done better is tantamount to admitting that we did something wrong, which is quickly conflated in public opinion with “SBF and EA are closely intertwined, one and the same.” (Remember how low public awareness of EA is in general).
The communication needs to be: EA was defrauded by SBF. He has done us massive harm. We want to make sure nobody will ever do that to EA again. We need to ensure that any public communication puts SBF on one side, and EA on the other side, a victim of his crimes just like the millions of investors.
The fact that he saw himself as an EA is not the point. Nobody in EA encouraged him to commit fraud. People in EA may have been a bit naive, but nobody in EA was guilty of defrauding millions of investors. That was SBF.
So Will’s legal advice was spot on. Any immediate statement would have seemed defensive, as if he had something to feel guilty about, which would have resulted in more harm to the public perception of EA because of association with SBF.
SBF committed crimes.
Will or EA did not commit crimes, or contribute to SBF’s crimes.
SBF defrauded and harmed millions of investors.
SBF also defrauded and harmed the EA movement.
The EA movement is angry with SBF. We want to make sure that nobody ever does that to us again.
As “good people”, we all want to look back and ask if there was something we could have done differently that would have prevented Sam from harming those millions of innocent investors. It is natural to wonder, the same way we see any tragedy and wonder if we could have prevented it. But we need to be very careful about the PR aspects of this (and yes, we all hate PR, but it is reality—read Pirandello if you don’t believe me!). If we start making statements that suggest that we did something wrong, we’re just going to be directing some of the public anger away from SBF and towards EA. I don’t think that’s helpful.
There is one caveat: if someone acting on behalf on an EA organisation truly did something wrong which contributed to this fraud, then obviously we need to investigate that. But I am not aware of any evidence to suggest that happened.
There is one caveat: if someone acting on behalf on an EA organisation truly did something wrong which contributed to this fraud, then obviously we need to investigate that. But I am not aware of any evidence to suggest that happened.
I tend to think EA did. Back in September 2023, I argued:
EA contributed to a vast financial fraud, through its:
People. SBF was the best-known EA, and one of the earliest 1%. FTX’s leadership was mostly EAs. FTXFF was overwhelmingly run by EAs, including EA’s main leader, and another intellectual leader of EA.
Resources. FTX had some EA staff and was funded by EA investors.
PR. SBF’s EA-oriented philosophy on giving, and purported frugality served as cover for his unethical nature.
Ideology. SBF apparently had an RB ideology, as a risk-neutral act-utilitarian, who argued a decade ago why stealing was not in-principle wrong, on Felicifia. In my view, his ideology, at least as he professed it, could best be understood as an extremist variant of EA.
Of course, you can argue that contributing (point 1) people-time and (2) resources is consistent with us having just been victims, although I think that glosses over the extent to which EA folks at FTX had bought into Sam’s vision, and folks at FTXFF might have more mildly lapsed in judgment. And we could regard (3) the PR issue as minor. But even so, (4) the ideology is important. FTX wasn’t just any scam. It was one that a mostly-EA group was motivated to commit, to some degree or other, based on EA-style/consequentialist reasoning. There were several other instances of crypto-related crimes in and around the EA community. And the FTX implosion shared some characteristics with those events, and with other EA scandals. As I argued:
Other EA scandals, similarly, often involve multiple of these elements:
[Person #1]: past sexual harassment issues, later reputation management including Wiki warring and misleading histories. (norm-violation, naive conseq.) [Person #2]: sexual harassment (norm-violation? naive conseq?) [Person #3] [Person #4] [Person #5]: three more instances of crypto crimes (scope sensitivity? Norm-violation, naive conseq.? naivete?) Intentional Insights: aggressive PR campaigns (norm-violation, naive conseq., naivete?) Leverage Research, including partial takeover of CEA (risk appetite, norm-violation, naive conseq, unilateralism, naivete) (We’ve seen major examples of sexual misbehaviour and crypto crimes in the rationalist community too.)
You could argue still that some of these elements are things that are shared with all financial crime. But then why have EAs committed >10% of the largest financial frauds of all-time, while consisting of about one millionth of the world’s population, and less than 0.1% and perhaps 0.01% of its startups? You can suppose that we were just unlucky, but I don’t find this particularly convincing.
I think that at this point, you should want to concede that EA appears to have contributed to FTX in quite a number of ways, and not all of them can be dismissed easily. That’s why I think a more thorough investigation is needed.
As for PR, I simply think that shouldn’t be the primary focus, and that it far from the most important consideration on the current margin. First, we need to get the facts in order. And then we need to describe the strategy. And then based on what kind of future EA deserves to have, we could decide how and whether to try to defend its image.
The communication needs to be: EA was defrauded by SBF. He has done us massive harm. We want to make sure nobody will ever do that to EA again. We need to ensure that any public communication puts SBF on one side, and EA on the other side, a victim of his crimes just like the millions of investors.
Upvoted.
But a problem is: I don’t think many people outside of EA believe that, nor will they believe it merely because EA sources self-interestedly repeat it. They do not have priors to believe EA was not somehow responsible for what happened, and the publicly-available evidence (mainly the Time article) points in the direction of at least some degree of responsibility. The more EA proclaims its innocence without coughing up evidence that is credible to the broader world, the more guilty it looks.
But I’ve worked for 20 years in a multinational and I know how companies deal with potential reputational damage, and I think we need to at least ask ourselves if it would be wise for us to do differently.
Consistency in Following the Usual Playbook
The usual playbook, as I see it, includes shutting up and hope that people lose interest and move on. I accept that there’s a reasonable case for deploying the usual playbook. But I don’t think you can really pick and choose elements out of that playbook.
For example, one of the standard plays is to quickly throw out most people in the splash zone of the scandal without any real adjudication of their culpability. This serves in part as propitiation to the masses, as well as a legible signal that you’re taking the whole thing seriously. It obviates some of the need for a publicly-credible investigation, because you’ve already expelled anyone for whom there is a reasonable basis to believe culpability might exist. This is true even though the organization knows there is a substantial possibility that the sacrificed individuals were not culpable, or at least not culpable enough to warrant their termination/removal.
Under the standard playbook, at least Will and Nick would be rendered personae non grata very early in the story. Their work is thrown down the memory hole, and neither is spoken of positively for at least several years. None of that is particularly fair or truth-seeking, of course. But I don’t think you get to have it both ways—you can’t credibly decline to follow the playbook because it is not truth-seeking and is unfair to certain insiders, and then reject calls for a legible, truth-seeking investigation because it doesn’t line up with the playbook. Although people have resigned from boards, and the extent of their “soft power” has been diminished, I don’t think EA has followed the standard crisis-management playbook in this regard.
Who Judges the Organization’s Crisis Response?
For non-profits, often the judge of the organization’s crisis response is the donor base. In most cases, that donor base is much more diverse and less intertwined than it is at (say) EVF. Although donors are not necessarily well-aligned to broader public concerns, the practical requirement that organizations satisfy concerns of their donor base means that the standard playbook includes at least a proxy for taking actions to address public concerns. EVF has had, as far as I can tell, exactly one systematically important donor and that donor is also ~an insider. Compare to, e.g., universities facing heat over alleged antisemitism from various billionaire donors. There’s no suggestion that Ackman, Lauder, et al. are in an insider relationship to Penn, MIT, etc. in the same way Open Phil is to EVF. Thus, the standard playbook is generally used under circumstances where there is an baseline business requirement to be somewhat willing to take actions to address a proxy for public concerns.
As I see it, at least some (but not all) of the calls for transparency and investigation are related to a desire for some sort of broader accountability that most non-profits face much more than EA organizations. As far as I can tell, the most suitable analogue to “a medium-size group of donors” for other nonprofits may be “the EA community, many members of which are making large indirect donations in terms of salary sacrifice.” The challenge is that discussions with the EA community are public in a way that communications with a group of a few dozen key donors are not for many non-profits.
Do you think the legal advice was correct? Or is it possible it was wrong to you?
If it was worth spending X millions on community building, feels like it may have been worth risking X/5 on lawsuits to avoid quite a lot of frustration.
It seems like when there is a crisis, the rationalists perhaps talk too much (the SSC NYT thing perhaps) but EA elites clam up and suddenly go all “due diligence” not sure that’s the right call either. (Not that I would do better).
I feel like “if you get legal advice, follow it” is a pretty widely held and sensible broad principle, and violating it can have very bad personal consequences. I think the bar should be pretty high for someone violating that principle, and I’m not sure “avoiding quite a lot of frustration” meets that bar, especially since the magnitude of the frustration is only obvious in hindsight.
I have very little doubt that any advice given to an individual with significant potential exposure to keep their mouths shut was correct advice as to that individual’s personal interests. I also have very little doubt that anyone who worked for or formally advised FTXFF fits in that category.
To the extent that Nathan is asking about legal advice given to EVF, I don’t think the principle would necessarily hold. Legal advice is going to focus relatively more on the client’s legal risks, and less so (if at all) on the traditionally-conceived public interest, what is in the interest of the long-term future, etc. I’d say “charitable organizations should act in their own legal self-interest” probably defaults to true, but that it’s a fairly weak presumption. With the possible and partial exception of lawyers who are also insiders, I think lawyers will significantly underweight considerations like the epistemic health of the broader EA community and also be seriously limited at estimating the effect of various scenarios on that consideration.
That being said, I doubt Will is in a particularly good position to evaluate the legal advice given to EVF because he was recused from FTX-related stuff due to serious conflicts of interests. If he were a lawyer, he might be in a good position to estimate—then he’d have both enough knowledge of facts and the right professional background to infer stuff based on that knowledge. But he isn’t.
While this is not expressing an opinion on your broader question, I think the distinction between individual legal exposure and organizational exposure is relevant here. It would be problematic to avoid certain collective costs of FTX by unfairly foisting them off on unconsenting individuals and organizations. As Will alluded to, it is possible that the costs would be borne by other EAs, not the speaker.
That being said, people could be indemnified. So I think it’s plausible to update somewhat the probability that there is some valid reason to fear severe to massive legal exposure to some extent. Or that information would come out in litigation that is more damaging than the inferences to be drawn from silence. (Without inside knowledge, I find that more likely than actual severe liability exposure.)
I’d be interested in specific scenarios or bad outcomes that we may have averted. E.g., much more media reporting on the EA-FTX association resulting in significantly greater brand damage? Prompting the legal system into investigating potential EA involvement in the FTX fraud, costing enormous further staff time despite not finding anything? Something else? I’m still not sure what example issues we were protecting against.
much more media reporting on the EA-FTX association resulting in significantly greater brand damage?
Most likely concern in my eyes.
The media tends to report on lawsuits when they are filed, at which time they merely contain unsubstantiated allegations and the defendant is less likely to comment. It’s unlikely that the media would report on the dismissal of a suit, especially if it was for reasons seen as somewhat technical rather than as a clear vindication of the EA individual/organization.
Moreover, it is pretty likely to me that EVF or other EA-affiliated entities have information they would be embarrassed to come out in discovery. This is not based on any belief about misconduct, but the base rate that organizations that had a bad miss / messup have information related thereunto that they would be embarrassed about (and my characterization of a bad miss / messup here, whether or not a liability-creating one).
If a sufficiently motivated plaintiff sued, and came up with a legal theory that survived a motion to dismiss, I think it fairly likely that embarrassing information would need to be disclosed in discovery. They could require various persons and organizations to answer questions, under oath, that they would rather not answer. Questions from a hostile examiner motivated to uncover damaging information, not a sympathetic podcaster. While “I don’t remember” is usually an acceptable answer, it also can make the other side’s evidence uncontested if they have anything on point.
For purposes of the next two sentences, “a sufficient basis to believe” means enough that a court would likely allow a good deal of digging if the matter was related or even adjacent to something that was material for purposes of the specific litigation. There’s a sufficient basis to believe that EA leadership may have had good reasons to believe SBF had committed fraud against Alameda investors.[1] There is a sufficient basis to believe that EA PR people were aware of SBF-related risk and were actively working on the topic.[2] The plaintiff could also expand the scope of discovery as previously-discovered information warranted.
If the case didn’t settle before summary-judgment motions, the juicy bits would be all laid out in the plaintiff’s motion, open to public view.
Prompting the legal system into investigating potential EA involvement in the FTX fraud, costing enormous further staff time despite not finding anything?
This seems rather unlikely. The FTX debtor entity is cooperating with the feds. DOJ has several ex-insiders who are singing like canaries, who have good lawyers, and who know that the more people they help the feds convict, the better things will be for their sentences. If there were reasons for the feds to be looking at potential EA involvement in the FTX fraud, it is almost certain the feds would know that at this point without any help from EA sources. Moreover, the FTX or ex-insider information would likely be enough to get the necessary search warrants, wiretaps, etc.
There is of course also, as Will’s note implies, the distraction/expense/angst/etc. of dealing with litigation, whether or not it ultimately has any merit. That would justify giving some weight to whether a disclosure increases the risk of any lawsuit, independent of any merit or concerns about external adverse effects like publicity. However, in my mind that goes both ways! I’d affirmatively want to disclose most information that makes would-be plaintiffs less likely to sue me. If one’s prior is that conditioned on X being not-true, there’s a 75% chance I would specifically deny X for litigation-avoidance reasons, then one can update on the fact that X hasn’t been denied.
Although the Time article doesn’t specify exactly what information was shared with EA leadership, it does indicate that an Alameda exile told Time that SBF “didn’t have a distinction between firm capital and trading capital. It was all one pool.” That’s at least a badge of fraud (commingling). The exiles accused SBF of various things, including “‘willful and knowing violations of agreements or obligations, particularly with regards to creditors’—all language that echoes the U.S. criminal code.” The document alleges that SBF was “misreporting numbers” and “failing to update investors on poor performance.” Continuing: “The team ‘didn’t trust Sam to be in investor meetings alone,’ colleagues wrote. ‘Sam will lie, and distort the truth for his own gain,’ the document says.” Lying to investors is pretty much diagnostic of fraud.
The New Yorker, quoting an unnamed participant on a leadership slack channel: “I guess my point in sharing this is to raise awareness that a) in some circles SBF’s reputation is very bad b) in some circles SBF’s reputation is closely tied to EA, and c) there’s some chance SBF’s reputation gets much, much worse. But I don’t have any data on these (particularly c, I have no idea what types of scenarios are likely), though it seems like a major PR vulnerability. I imagine people working full-time on PR are aware of this and actively working to mitigate it, but it seemed worth passing on if not since many people may not be having these types of interactions.”
Alameda exile told Time that SBF “didn’t have a distinction between firm capital and trading capital. It was all one pool.” That’s at least a badge of fraud (commingling)
Alameda was a prop trading firm, so there isn’t normally any distinction between those. The only reason this didn’t apply was that there was a third bucket of funds, pass-through custodial funds that belonged to FTX customers, which they evidently didn’t pass through due to poor record keeping. That’s not as much indicative of fraud, it’s indicative of incompetance.
On talking about this publicly
A number of people have asked why there hasn’t been more communication around FTX. I’ll explain my own case here; I’m not speaking for others. The upshot is that, honestly, I still feel pretty clueless about what would have been the right decisions, in terms of communications, from both me and from others, including EV, over the course of the last year and a half. I do, strongly, feel like I misjudged how long everything would take, and I really wish I’d gotten myself into the mode of “this will all take years.”
Shortly after the collapse, I drafted a blog post and responses to comments on the Forum. I was also getting a lot of media requests, and I was somewhat sympathetic to the idea of doing podcasts about the collapse — defending EA in the face of the criticism it was getting. My personal legal advice was very opposed to speaking publicly, for reasons I didn’t wholly understand; the reasons were based on a general principle rather than anything to do with me, as they’ve seen a lot of people talk publicly about ongoing cases and it’s gone badly for them, in a variety of ways. (As I’ve learned more, I’ve come to see that this view has a lot of merit to it). I can’t remember EV’s view, though in general it was extremely cautious about communication at that time. I also got mixed comments on whether my Forum posts were even helpful; I haven’t re-read them recently, but I was in a pretty bad headspace at the time. Advisors said that by January things would be clearer. That didn’t seem like that long to wait, and I felt very aware of how little I knew.
The “time at which it’s ok to speak”, according to my advisors, kept getting pushed back. But by March I felt comfortable, personally, about speaking publicly. I had a blog post ready to go, but by this point the Mintz investigation (that is, the investigation that EV had commissioned) had gotten going. Mintz were very opposed to me speaking publicly. I think they said something like that my draft was right on the line where they’d consider resigning from running the investigation if I posted it. They thought the integrity of the investigation would be compromised if I posted, because my public statements might have tainted other witnesses in the investigation, or had a bearing on what they said to the investigators. EV generally wanted to follow Mintz’s view on this, but couldn’t share legal advice with me, so it was hard for me to develop my own sense of the costs and benefits of communicating.
By December, the Mintz report was fully finished and the bankruptcy settlement was completed. I was travelling (vacation and work) over December and January, and aimed to record podcasts on FTX in February. That got delayed by a month because of Sam Harris’s schedule, so they got recorded in March.
It’s still the case that talking about this feels like walking through a minefield. There’s still a real risk of causing unjustified and unfair lawsuits against me or other people or organisations, which, even if frivolous, can impose major financial costs and lasting reputational damage. Other relevant people also don’t want to talk about the topic, even if just for their own sanity, and I don’t want to force their hand. In my own case, thinking and talking about this topic feels like fingering an open wound, so I’m sympathetic to their decision.
I’ve had quite a few disagreements with other EA’s about this, but I will repeat it here, and maybe get more downvotes. But I’ve worked for 20 years in a multinational and I know how companies deal with potential reputational damage, and I think we need to at least ask ourselves if it would be wise for us to do differently.
EA is part of a real world which isn’t necessarily fair and logical. Our reputation in this real world is vitally important to the good work we plan to do—it impacts our ability to get donations, to carry out projects, to influence policy.
We all believe we’re willing to make sacrifices to help EA succeed.
Here’s the hard part: Sometimes the sacrifice we have to make is to go against our own natural desire to do what feels right.
It feels right that Will and other people from EA should make public statements about how bad we feel about FTX and how we’ll try to do better in future and so on.
But the legal advice Will got was correct, and was also what was best for EA.
There was zero chance that the FTX scandal could reflect positively on EA. But there were steps Will and others could take to minimise the damage to the EA movement.
The most important of these is to distance ourselves from the crimes that SBF committed. He committed those crimes. Not EA. Not Will. SBF caused massive harm to EA and to Will.
I see a lot of EA’s soul-searching and asking what we could have done differently. Which is good in a way. But we need to be very careful. Admitting that we (EA movement) should have done better is tantamount to admitting that we did something wrong, which is quickly conflated in public opinion with “SBF and EA are closely intertwined, one and the same.” (Remember how low public awareness of EA is in general).
The communication needs to be: EA was defrauded by SBF. He has done us massive harm. We want to make sure nobody will ever do that to EA again. We need to ensure that any public communication puts SBF on one side, and EA on the other side, a victim of his crimes just like the millions of investors.
The fact that he saw himself as an EA is not the point. Nobody in EA encouraged him to commit fraud. People in EA may have been a bit naive, but nobody in EA was guilty of defrauding millions of investors. That was SBF.
So Will’s legal advice was spot on. Any immediate statement would have seemed defensive, as if he had something to feel guilty about, which would have resulted in more harm to the public perception of EA because of association with SBF.
SBF committed crimes.
Will or EA did not commit crimes, or contribute to SBF’s crimes.
SBF defrauded and harmed millions of investors.
SBF also defrauded and harmed the EA movement.
The EA movement is angry with SBF. We want to make sure that nobody ever does that to us again.
As “good people”, we all want to look back and ask if there was something we could have done differently that would have prevented Sam from harming those millions of innocent investors. It is natural to wonder, the same way we see any tragedy and wonder if we could have prevented it. But we need to be very careful about the PR aspects of this (and yes, we all hate PR, but it is reality—read Pirandello if you don’t believe me!). If we start making statements that suggest that we did something wrong, we’re just going to be directing some of the public anger away from SBF and towards EA. I don’t think that’s helpful.
There is one caveat: if someone acting on behalf on an EA organisation truly did something wrong which contributed to this fraud, then obviously we need to investigate that. But I am not aware of any evidence to suggest that happened.
I tend to think EA did. Back in September 2023, I argued:
Of course, you can argue that contributing (point 1) people-time and (2) resources is consistent with us having just been victims, although I think that glosses over the extent to which EA folks at FTX had bought into Sam’s vision, and folks at FTXFF might have more mildly lapsed in judgment. And we could regard (3) the PR issue as minor. But even so, (4) the ideology is important. FTX wasn’t just any scam. It was one that a mostly-EA group was motivated to commit, to some degree or other, based on EA-style/consequentialist reasoning. There were several other instances of crypto-related crimes in and around the EA community. And the FTX implosion shared some characteristics with those events, and with other EA scandals. As I argued:
You could argue still that some of these elements are things that are shared with all financial crime. But then why have EAs committed >10% of the largest financial frauds of all-time, while consisting of about one millionth of the world’s population, and less than 0.1% and perhaps 0.01% of its startups? You can suppose that we were just unlucky, but I don’t find this particularly convincing.
I think that at this point, you should want to concede that EA appears to have contributed to FTX in quite a number of ways, and not all of them can be dismissed easily. That’s why I think a more thorough investigation is needed.
As for PR, I simply think that shouldn’t be the primary focus, and that it far from the most important consideration on the current margin. First, we need to get the facts in order. And then we need to describe the strategy. And then based on what kind of future EA deserves to have, we could decide how and whether to try to defend its image.
Upvoted.
But a problem is: I don’t think many people outside of EA believe that, nor will they believe it merely because EA sources self-interestedly repeat it. They do not have priors to believe EA was not somehow responsible for what happened, and the publicly-available evidence (mainly the Time article) points in the direction of at least some degree of responsibility. The more EA proclaims its innocence without coughing up evidence that is credible to the broader world, the more guilty it looks.
Consistency in Following the Usual Playbook
The usual playbook, as I see it, includes shutting up and hope that people lose interest and move on. I accept that there’s a reasonable case for deploying the usual playbook. But I don’t think you can really pick and choose elements out of that playbook.
For example, one of the standard plays is to quickly throw out most people in the splash zone of the scandal without any real adjudication of their culpability. This serves in part as propitiation to the masses, as well as a legible signal that you’re taking the whole thing seriously. It obviates some of the need for a publicly-credible investigation, because you’ve already expelled anyone for whom there is a reasonable basis to believe culpability might exist. This is true even though the organization knows there is a substantial possibility that the sacrificed individuals were not culpable, or at least not culpable enough to warrant their termination/removal.
Under the standard playbook, at least Will and Nick would be rendered personae non grata very early in the story. Their work is thrown down the memory hole, and neither is spoken of positively for at least several years. None of that is particularly fair or truth-seeking, of course. But I don’t think you get to have it both ways—you can’t credibly decline to follow the playbook because it is not truth-seeking and is unfair to certain insiders, and then reject calls for a legible, truth-seeking investigation because it doesn’t line up with the playbook. Although people have resigned from boards, and the extent of their “soft power” has been diminished, I don’t think EA has followed the standard crisis-management playbook in this regard.
Who Judges the Organization’s Crisis Response?
For non-profits, often the judge of the organization’s crisis response is the donor base. In most cases, that donor base is much more diverse and less intertwined than it is at (say) EVF. Although donors are not necessarily well-aligned to broader public concerns, the practical requirement that organizations satisfy concerns of their donor base means that the standard playbook includes at least a proxy for taking actions to address public concerns. EVF has had, as far as I can tell, exactly one systematically important donor and that donor is also ~an insider. Compare to, e.g., universities facing heat over alleged antisemitism from various billionaire donors. There’s no suggestion that Ackman, Lauder, et al. are in an insider relationship to Penn, MIT, etc. in the same way Open Phil is to EVF. Thus, the standard playbook is generally used under circumstances where there is an baseline business requirement to be somewhat willing to take actions to address a proxy for public concerns.
As I see it, at least some (but not all) of the calls for transparency and investigation are related to a desire for some sort of broader accountability that most non-profits face much more than EA organizations. As far as I can tell, the most suitable analogue to “a medium-size group of donors” for other nonprofits may be “the EA community, many members of which are making large indirect donations in terms of salary sacrifice.” The challenge is that discussions with the EA community are public in a way that communications with a group of a few dozen key donors are not for many non-profits.
Do you think the legal advice was correct? Or is it possible it was wrong to you?
If it was worth spending X millions on community building, feels like it may have been worth risking X/5 on lawsuits to avoid quite a lot of frustration.
It seems like when there is a crisis, the rationalists perhaps talk too much (the SSC NYT thing perhaps) but EA elites clam up and suddenly go all “due diligence” not sure that’s the right call either. (Not that I would do better).
I feel like “if you get legal advice, follow it” is a pretty widely held and sensible broad principle, and violating it can have very bad personal consequences. I think the bar should be pretty high for someone violating that principle, and I’m not sure “avoiding quite a lot of frustration” meets that bar, especially since the magnitude of the frustration is only obvious in hindsight.
I have very little doubt that any advice given to an individual with significant potential exposure to keep their mouths shut was correct advice as to that individual’s personal interests. I also have very little doubt that anyone who worked for or formally advised FTXFF fits in that category.
To the extent that Nathan is asking about legal advice given to EVF, I don’t think the principle would necessarily hold. Legal advice is going to focus relatively more on the client’s legal risks, and less so (if at all) on the traditionally-conceived public interest, what is in the interest of the long-term future, etc. I’d say “charitable organizations should act in their own legal self-interest” probably defaults to true, but that it’s a fairly weak presumption. With the possible and partial exception of lawyers who are also insiders, I think lawyers will significantly underweight considerations like the epistemic health of the broader EA community and also be seriously limited at estimating the effect of various scenarios on that consideration.
That being said, I doubt Will is in a particularly good position to evaluate the legal advice given to EVF because he was recused from FTX-related stuff due to serious conflicts of interests. If he were a lawyer, he might be in a good position to estimate—then he’d have both enough knowledge of facts and the right professional background to infer stuff based on that knowledge. But he isn’t.
While this is not expressing an opinion on your broader question, I think the distinction between individual legal exposure and organizational exposure is relevant here. It would be problematic to avoid certain collective costs of FTX by unfairly foisting them off on unconsenting individuals and organizations. As Will alluded to, it is possible that the costs would be borne by other EAs, not the speaker.
That being said, people could be indemnified. So I think it’s plausible to update somewhat the probability that there is some valid reason to fear severe to massive legal exposure to some extent. Or that information would come out in litigation that is more damaging than the inferences to be drawn from silence. (Without inside knowledge, I find that more likely than actual severe liability exposure.)
I’d be interested in specific scenarios or bad outcomes that we may have averted. E.g., much more media reporting on the EA-FTX association resulting in significantly greater brand damage? Prompting the legal system into investigating potential EA involvement in the FTX fraud, costing enormous further staff time despite not finding anything? Something else? I’m still not sure what example issues we were protecting against.
Most likely concern in my eyes.
The media tends to report on lawsuits when they are filed, at which time they merely contain unsubstantiated allegations and the defendant is less likely to comment. It’s unlikely that the media would report on the dismissal of a suit, especially if it was for reasons seen as somewhat technical rather than as a clear vindication of the EA individual/organization.
Moreover, it is pretty likely to me that EVF or other EA-affiliated entities have information they would be embarrassed to come out in discovery. This is not based on any belief about misconduct, but the base rate that organizations that had a bad miss / messup have information related thereunto that they would be embarrassed about (and my characterization of a bad miss / messup here, whether or not a liability-creating one).
If a sufficiently motivated plaintiff sued, and came up with a legal theory that survived a motion to dismiss, I think it fairly likely that embarrassing information would need to be disclosed in discovery. They could require various persons and organizations to answer questions, under oath, that they would rather not answer. Questions from a hostile examiner motivated to uncover damaging information, not a sympathetic podcaster. While “I don’t remember” is usually an acceptable answer, it also can make the other side’s evidence uncontested if they have anything on point.
For purposes of the next two sentences, “a sufficient basis to believe” means enough that a court would likely allow a good deal of digging if the matter was related or even adjacent to something that was material for purposes of the specific litigation. There’s a sufficient basis to believe that EA leadership may have had good reasons to believe SBF had committed fraud against Alameda investors.[1] There is a sufficient basis to believe that EA PR people were aware of SBF-related risk and were actively working on the topic.[2] The plaintiff could also expand the scope of discovery as previously-discovered information warranted.
If the case didn’t settle before summary-judgment motions, the juicy bits would be all laid out in the plaintiff’s motion, open to public view.
This seems rather unlikely. The FTX debtor entity is cooperating with the feds. DOJ has several ex-insiders who are singing like canaries, who have good lawyers, and who know that the more people they help the feds convict, the better things will be for their sentences. If there were reasons for the feds to be looking at potential EA involvement in the FTX fraud, it is almost certain the feds would know that at this point without any help from EA sources. Moreover, the FTX or ex-insider information would likely be enough to get the necessary search warrants, wiretaps, etc.
There is of course also, as Will’s note implies, the distraction/expense/angst/etc. of dealing with litigation, whether or not it ultimately has any merit. That would justify giving some weight to whether a disclosure increases the risk of any lawsuit, independent of any merit or concerns about external adverse effects like publicity. However, in my mind that goes both ways! I’d affirmatively want to disclose most information that makes would-be plaintiffs less likely to sue me. If one’s prior is that conditioned on X being not-true, there’s a 75% chance I would specifically deny X for litigation-avoidance reasons, then one can update on the fact that X hasn’t been denied.
Although the Time article doesn’t specify exactly what information was shared with EA leadership, it does indicate that an Alameda exile told Time that SBF “didn’t have a distinction between firm capital and trading capital. It was all one pool.” That’s at least a badge of fraud (commingling). The exiles accused SBF of various things, including “‘willful and knowing violations of agreements or obligations, particularly with regards to creditors’—all language that echoes the U.S. criminal code.” The document alleges that SBF was “misreporting numbers” and “failing to update investors on poor performance.” Continuing: “The team ‘didn’t trust Sam to be in investor meetings alone,’ colleagues wrote. ‘Sam will lie, and distort the truth for his own gain,’ the document says.” Lying to investors is pretty much diagnostic of fraud.
The New Yorker, quoting an unnamed participant on a leadership slack channel: “I guess my point in sharing this is to raise awareness that a) in some circles SBF’s reputation is very bad b) in some circles SBF’s reputation is closely tied to EA, and c) there’s some chance SBF’s reputation gets much, much worse. But I don’t have any data on these (particularly c, I have no idea what types of scenarios are likely), though it seems like a major PR vulnerability. I imagine people working full-time on PR are aware of this and actively working to mitigate it, but it seemed worth passing on if not since many people may not be having these types of interactions.”
Alameda was a prop trading firm, so there isn’t normally any distinction between those. The only reason this didn’t apply was that there was a third bucket of funds, pass-through custodial funds that belonged to FTX customers, which they evidently didn’t pass through due to poor record keeping. That’s not as much indicative of fraud, it’s indicative of incompetance.