Hi! Thank you very much for writing this. It’s clear that you’ve spent a lot of time thinking about this subject, are well-informed, and care about doing the right thing. I will aim for a quick response now in the interest of having you & the public understand the current state of things; I might like to do a more thorough/thoughtful response in the future, but will have to balance that against ongoing bandwidth and legal counsel. (I also have a private letter I’ve been circulating about this situation which I’m happy to DM you, provided you don’t share without checking in.)
I am considering a range of options for what to do about the lawsuit. As I’ve previously written, and no doubt you’ve seen:
Manifund ran this program for ~2 years and distributed most of this funding to charities & charitable projects, with the top 3 being Givewell (~$61k), LTFF (~$38k), Rethink Priorities (~$27k). We offered to return remaining funds to the estate; we are still in litigation. This case has been going on for years, and may continue for months at least; litigation takes a while. I do hope to write a retro on this overall program someday.
And then, some context on Manifund’s finances: we’re not an especially rich organization. We’ve never received a grant from CG, or most other philanthropic funders; we’re primarily bootstrapped off of a 5% ops fee when we match projects and donors. As of earlier this month, we held an estimated $6-8m of assets, depending on how you count, but most of it is assigned to various Manifund donor accounts, or subprojects like Frame Fellowship. See https://manifund.org/finances. We estimated our net unrestricted assets at about $400k, which is something like 3-6 months of runway across all of our ongoing projects (primarily due to ongoing burn from operating Mox).
So, I am mostly considering whether I should make a large personal donation to Manifund to help resolve the lawsuit. I do have some money personally, mostly from having worked at Google for a couple years, and then through public stock investments; but, not that much money. Between me and my wife, we have ~$1.6m in liquid assets. (On paper, my Manifold stock might be worth another $1-2m, but for various reasons I think it’s correct to sharply discount that number; for example, the original 3 founders have all left Manifold.) Sometimes, $1.6m feels like a lot, and sometimes, given our 2 kids and the cost of SF, it doesn’t feel like very much. (FWIW, I’ve never taken a salary at Manifund, and at Manifold the founders drew a salary of $80k-$100k, as we were trying to conserve runway.)
Anyhow, I honestly would be pretty open to picking option 2, if it meant that Manifund could work with Caroline in a capacity that is endorsed by the community and the world. (It does depend a bit on Caroline’s own plans too.)
I appreciate your writeup for laying out these considerations. Some of my worry is that even if we return the full amount, most people will continue thinking that they don’t wish to collaborate with Manifund; your post (and, Andy’s?) provide some evidence to the contrary. I think I’ll set up a quick EA Forum poll for others to weigh in on this matter.
(I first tried an EA Forum poll, but 1. it error’d and wouldn’t create, and 2. it doesn’t support multiple choice, just a spectrum agree/disagree, and I couldn’t figure out how to express these options correctly.)
“Some of my worry is that even if we return the full amount, most people will continue thinking that they don’t wish to collaborate with Manifund; your post (and, Andy’s?) provide some evidence to the contrary.”
I acknowledge that some of your worry is even if you return the amount, people still won’t collaborate with Manifund.
Stolen assets that shouldn’t have gone to Manifund should be given back, “good” results or not, beneficial to Manifund or not. Especially when it’s not. It’s how integrity works.
Manifund isn’t there to serve anyone’s personal debts. Manifund doesn’t owe you giving someone a chance of redemption or Caroline one. Manifund needs you more than Caroline needs you.
For Caroline, she’s a more than capable adult. Sometimes the best thing someone who fucked up can do is leave and give what and who you wronged space
Thank you for the forthcoming response. I would be interested in seeing the private letter you mentioned at an appropriate time. Let me register a few more thoughts here before I see it.
I don’t have a good sense of how the wider community would react, and obviously you’re not going to please everybody. But from my perspective, if you return $500k and you assuage some of the governance concerns that I mentioned here under “Further concerns in the case of Option 2”, it would go a long way.
Something I can’t predict is whether you would see holdouts who insist that you should return some or all of the $1M seed funding, too. If it helps, I could spell out in more detail why I decided not to push that point:
It has something to do with the complexity of equity, as I said in the post, as well as the number of parties who have a stake. The negotiations are still in-progress, and even without seeing the private letter I can guess that it’s thorny.
It probably also counts for something that the seed investment was made in early 2022 before the culprits necessarily knew how much user money they had stolen.
Even from the inside view, you won’t actually know for sure how much you have cleared from Manifold equity until some sort of liquidity event, and you would also have trouble personally repaying anything so large before that time.
All of this has been pretty messy to dig into, but as I attempt to reason through what is being under- or over-counted in the various interpretations of this story, I think $500k is a decent ballpark of your own excess “moral” debt to FTX beyond what will be legally reclaimed.
Moreover, I would say that on a practical level, the goal is to see you repay a meaningful amount of what FTX bestowed on you, to show that you recognize the conflict and want to fix it. By this approach, a reasonable amount would be a tangible hardship without ruining you – I’m aware that you have a young family and that some of your investments are illiquid. I think the $500k would meet that bar.
Okay, unfortunately the EA Forum DM functionality is also broken for me, atm. Could you post a reply with an anonymous email address for me to email the letter to? I’ll email from austin@manifund.org.
Separately, you seem to think the $500k figure is particularly important. Does that mean that, even if we reached a settlement with the FTX estate to return some lower amount, you believe that we ought to return $500k anyways? This is how I interpret your original post, but this seems somewhat unintuitive to me and I’d appreciate you explaining more.
Yes, I think that money should be returned beyond the amount that you would settle upon. As I wrote in the post:
it is only through quirks of the legal process that EA and rationalist orgs have been able to keep so much of the money.
In most cases, the outcomes of that legal process seem acceptable, but not in this case of Manifold:
The point is, what’s fair for Lightcone and other orgs is not what’s fair for you. The bar is higher for you now, if you want to pay Caroline even one dollar.
Basically, I believe that there is a legal debt and a functional debt. The legal debt, by definition, is whatever settlement competent lawyers arrive at. The functional debt is generally greater. For most EA orgs, it would feel fine to write off the functional debt in exchange for some gratitude toward the system and some soberness around the facts and lessons of FTX. But in your case, it would be best for you to settle the difference, lest you end up paying Caroline with what is functionally FTX money.
So for example, if Manifold/Manifund were to return $200k of the $500 through a legal settlement, then it would make sense to pay an extra $300k voluntarily if you want to employ Caroline (and retroactively, Nishad). This would resolve the conflict of interest, in my mind.
(I do see Nishad named in one of the FTX estate’s filings, and perhaps they will also press the issue of Caroline when they find out. This may move the needle towards a fuller recovery, but still seems unlikely to hit the full $500k, and I think you should make up the functional difference.)
Mechanically, I do not know whether your eventual settlement will itemize the breakdown of the $508k separately from the $1m, but you get the general idea.
Separately, there are other mechanical steps I do not understand here, e.g. when you write
I am mostly considering whether I should make a large personal donation to Manifund to help resolve the lawsuit.
that seems like it’s the first of two steps. First, your money goes into Manifund, and second, the money somehow goes from Manifund to the FTX estate. I do see that Manifund has been added as a defendant alongside Manifold. But are you imagining that this money gets held in some designated account at Manifund until the case is settled and you have clearer instructions on payment?
There are other technical points that are not clear to me, but I’m sure there’s a way for these details to all make sense.
Hi! Thank you very much for writing this. It’s clear that you’ve spent a lot of time thinking about this subject, are well-informed, and care about doing the right thing. I will aim for a quick response now in the interest of having you & the public understand the current state of things; I might like to do a more thorough/thoughtful response in the future, but will have to balance that against ongoing bandwidth and legal counsel. (I also have a private letter I’ve been circulating about this situation which I’m happy to DM you, provided you don’t share without checking in.)
I am considering a range of options for what to do about the lawsuit. As I’ve previously written, and no doubt you’ve seen:
And then, some context on Manifund’s finances: we’re not an especially rich organization. We’ve never received a grant from CG, or most other philanthropic funders; we’re primarily bootstrapped off of a 5% ops fee when we match projects and donors. As of earlier this month, we held an estimated $6-8m of assets, depending on how you count, but most of it is assigned to various Manifund donor accounts, or subprojects like Frame Fellowship. See https://manifund.org/finances. We estimated our net unrestricted assets at about $400k, which is something like 3-6 months of runway across all of our ongoing projects (primarily due to ongoing burn from operating Mox).
So, I am mostly considering whether I should make a large personal donation to Manifund to help resolve the lawsuit. I do have some money personally, mostly from having worked at Google for a couple years, and then through public stock investments; but, not that much money. Between me and my wife, we have ~$1.6m in liquid assets. (On paper, my Manifold stock might be worth another $1-2m, but for various reasons I think it’s correct to sharply discount that number; for example, the original 3 founders have all left Manifold.) Sometimes, $1.6m feels like a lot, and sometimes, given our 2 kids and the cost of SF, it doesn’t feel like very much. (FWIW, I’ve never taken a salary at Manifund, and at Manifold the founders drew a salary of $80k-$100k, as we were trying to conserve runway.)
Anyhow, I honestly would be pretty open to picking option 2, if it meant that Manifund could work with Caroline in a capacity that is endorsed by the community and the world. (It does depend a bit on Caroline’s own plans too.)
I appreciate your writeup for laying out these considerations. Some of my worry is that even if we return the full amount, most people will continue thinking that they don’t wish to collaborate with Manifund; your post (and, Andy’s?) provide some evidence to the contrary. I think I’ll set up a quick EA Forum poll for others to weigh in on this matter.
I’ve set up a poll now on Manifold:
(I first tried an EA Forum poll, but 1. it error’d and wouldn’t create, and 2. it doesn’t support multiple choice, just a spectrum agree/disagree, and I couldn’t figure out how to express these options correctly.)
“Some of my worry is that even if we return the full amount, most people will continue thinking that they don’t wish to collaborate with Manifund; your post (and, Andy’s?) provide some evidence to the contrary.”
I acknowledge that some of your worry is even if you return the amount, people still won’t collaborate with Manifund.
Stolen assets that shouldn’t have gone to Manifund should be given back, “good” results or not, beneficial to Manifund or not. Especially when it’s not. It’s how integrity works.
Manifund isn’t there to serve anyone’s personal debts. Manifund doesn’t owe you giving someone a chance of redemption or Caroline one. Manifund needs you more than Caroline needs you.
For Caroline, she’s a more than capable adult. Sometimes the best thing someone who fucked up can do is leave and give what and who you wronged space
Thank you for the forthcoming response. I would be interested in seeing the private letter you mentioned at an appropriate time. Let me register a few more thoughts here before I see it.
I don’t have a good sense of how the wider community would react, and obviously you’re not going to please everybody. But from my perspective, if you return $500k and you assuage some of the governance concerns that I mentioned here under “Further concerns in the case of Option 2”, it would go a long way.
Something I can’t predict is whether you would see holdouts who insist that you should return some or all of the $1M seed funding, too. If it helps, I could spell out in more detail why I decided not to push that point:
It has something to do with the complexity of equity, as I said in the post, as well as the number of parties who have a stake. The negotiations are still in-progress, and even without seeing the private letter I can guess that it’s thorny.
It probably also counts for something that the seed investment was made in early 2022 before the culprits necessarily knew how much user money they had stolen.
Even from the inside view, you won’t actually know for sure how much you have cleared from Manifold equity until some sort of liquidity event, and you would also have trouble personally repaying anything so large before that time.
All of this has been pretty messy to dig into, but as I attempt to reason through what is being under- or over-counted in the various interpretations of this story, I think $500k is a decent ballpark of your own excess “moral” debt to FTX beyond what will be legally reclaimed.
Moreover, I would say that on a practical level, the goal is to see you repay a meaningful amount of what FTX bestowed on you, to show that you recognize the conflict and want to fix it. By this approach, a reasonable amount would be a tangible hardship without ruining you – I’m aware that you have a young family and that some of your investments are illiquid. I think the $500k would meet that bar.
Okay, unfortunately the EA Forum DM functionality is also broken for me, atm. Could you post a reply with an anonymous email address for me to email the letter to? I’ll email from austin@manifund.org.
Separately, you seem to think the $500k figure is particularly important. Does that mean that, even if we reached a settlement with the FTX estate to return some lower amount, you believe that we ought to return $500k anyways? This is how I interpret your original post, but this seems somewhat unintuitive to me and I’d appreciate you explaining more.
I will be in touch with you.
Yes, I think that money should be returned beyond the amount that you would settle upon. As I wrote in the post:
In most cases, the outcomes of that legal process seem acceptable, but not in this case of Manifold:
Basically, I believe that there is a legal debt and a functional debt. The legal debt, by definition, is whatever settlement competent lawyers arrive at. The functional debt is generally greater. For most EA orgs, it would feel fine to write off the functional debt in exchange for some gratitude toward the system and some soberness around the facts and lessons of FTX. But in your case, it would be best for you to settle the difference, lest you end up paying Caroline with what is functionally FTX money.
So for example, if Manifold/Manifund were to return $200k of the $500 through a legal settlement, then it would make sense to pay an extra $300k voluntarily if you want to employ Caroline (and retroactively, Nishad). This would resolve the conflict of interest, in my mind.
(I do see Nishad named in one of the FTX estate’s filings, and perhaps they will also press the issue of Caroline when they find out. This may move the needle towards a fuller recovery, but still seems unlikely to hit the full $500k, and I think you should make up the functional difference.)
Mechanically, I do not know whether your eventual settlement will itemize the breakdown of the $508k separately from the $1m, but you get the general idea.
Separately, there are other mechanical steps I do not understand here, e.g. when you write
that seems like it’s the first of two steps. First, your money goes into Manifund, and second, the money somehow goes from Manifund to the FTX estate. I do see that Manifund has been added as a defendant alongside Manifold. But are you imagining that this money gets held in some designated account at Manifund until the case is settled and you have clearer instructions on payment?
There are other technical points that are not clear to me, but I’m sure there’s a way for these details to all make sense.