This is an ancillary point, but IMO it would be very unfair to focus too much on what Will personally did or did not know about FTX. There were plenty of other opportunities for other people with far less personal involvement to partially figure this one out, and some did so before the site’s failure.
My own major redflag about FTX, for instance, was the employment of Dan Friedberg as their chief regulatory officer, a known liar and fraud-enabler from his involvement with the UltimateBet superusing scandal. Friedberg’s executive role at FTX was public record, while the tapes that confirmed the degree of his involvement in the thefts at UltimateBet were leaked in 2013 and were widely publicized in the poker community. Some prominent EAs are even former professional poker players (Igor Kurganov and Liv Boeree).
Even just a few months before FTX’s failure, enormous redflags were emerging everywhere. Due to the bankruptcy proceedings of crypto lender Voyager, it became public knowledge in July 2022 that Alameda Research owed them $377 million at the time of bankruptcy. The obvious conclusion was, that like Voyager’s other outstanding debtor Three Arrows Capital, Alameda was insolvent (which we now know was in fact the the case). All this was public record and easy to find if you paid a bit of attention to crypto (i.e it was reported in the crypto press), which surely many EAs did at the time.
tl;dr This idea that only a small caste of elite EAs with access to privileged information about FTX could have made some good educated guesses about the potential risks does not stack up: there was plenty in the public record, and I suggest that EA collectively was very happy to look the other way as long as the money was flowing and SBF seemed like a nice EA vegan boy. No doubt Will & other elite EAs deserve some blame, but it would be very easy to try to pin too much on them.
Given how badly and broadly FTX was missed by a variety of actors, it’s hard to assign much relative blame to anyone absent circumstances that distinguish their potential blame above the baseline:
Some people had access to significant non-public information that should have increased their assessment of the risk posed by FTX, above and beyond the publicly-available information.
Some people had a particularized duty to conduct due dilligence and form an assessment of FTX’s risk (or to supervise someone to whom this duty was delegated). This duty would accrue from, e.g., a senior leadership role in an organization receiving large amounts of FTX funding, In other words, it was some people’s job to think about FTX risk.
Your average EA met neither of these criteria. In contrast, I think these two criteria—special knowledge and special responsibility—are multiplicative (i.e., that the potential blame for someone meeting both criteria is much higher than for those who met only one).
Some people had access to significant non-public information that should have increased their assessment of the risk posed by FTX
Plausible. Also plausible that they also had access to info that decreased their assessment. Perhaps the extra info they had access to even suggested they should decrease their assessment overall. Or perhaps they didn’t have access to any significant/relevant extra info.
It was some people’s job to think about FTX risk
Agreed. But I think Benjamin_Todd offers a good reflection on this:
I’m unconvinced that there should have been much more scenario / risk planning. I think it was already obvious that FTX might fall 90% in a crypto bear market (e.g. here) – and if that was all that happened, things would probably be OK. What surprised people was the alleged fraud and that everything was so entangled it would all go to zero at once, and I’m skeptical additional risk surveying exercises would have ended up with a significant credence on these (unless a bunch of other things were different). There were already some risk surveying attempts and they didn’t get there (e.g. in early 2022, metaculus had a 1% chance of FTX making any default on customer funds over the year with ~40 forecasters).
This is an ancillary point, but IMO it would be very unfair to focus too much on what Will personally did or did not know about FTX. There were plenty of other opportunities for other people with far less personal involvement to partially figure this one out, and some did so before the site’s failure.
My own major redflag about FTX, for instance, was the employment of Dan Friedberg as their chief regulatory officer, a known liar and fraud-enabler from his involvement with the UltimateBet superusing scandal. Friedberg’s executive role at FTX was public record, while the tapes that confirmed the degree of his involvement in the thefts at UltimateBet were leaked in 2013 and were widely publicized in the poker community. Some prominent EAs are even former professional poker players (Igor Kurganov and Liv Boeree).
Even just a few months before FTX’s failure, enormous redflags were emerging everywhere. Due to the bankruptcy proceedings of crypto lender Voyager, it became public knowledge in July 2022 that Alameda Research owed them $377 million at the time of bankruptcy. The obvious conclusion was, that like Voyager’s other outstanding debtor Three Arrows Capital, Alameda was insolvent (which we now know was in fact the the case). All this was public record and easy to find if you paid a bit of attention to crypto (i.e it was reported in the crypto press), which surely many EAs did at the time.
tl;dr This idea that only a small caste of elite EAs with access to privileged information about FTX could have made some good educated guesses about the potential risks does not stack up: there was plenty in the public record, and I suggest that EA collectively was very happy to look the other way as long as the money was flowing and SBF seemed like a nice EA vegan boy. No doubt Will & other elite EAs deserve some blame, but it would be very easy to try to pin too much on them.
Given how badly and broadly FTX was missed by a variety of actors, it’s hard to assign much relative blame to anyone absent circumstances that distinguish their potential blame above the baseline:
Some people had access to significant non-public information that should have increased their assessment of the risk posed by FTX, above and beyond the publicly-available information.
Some people had a particularized duty to conduct due dilligence and form an assessment of FTX’s risk (or to supervise someone to whom this duty was delegated). This duty would accrue from, e.g., a senior leadership role in an organization receiving large amounts of FTX funding, In other words, it was some people’s job to think about FTX risk.
Your average EA met neither of these criteria. In contrast, I think these two criteria—special knowledge and special responsibility—are multiplicative (i.e., that the potential blame for someone meeting both criteria is much higher than for those who met only one).
Plausible. Also plausible that they also had access to info that decreased their assessment. Perhaps the extra info they had access to even suggested they should decrease their assessment overall. Or perhaps they didn’t have access to any significant/relevant extra info.
Agreed. But I think Benjamin_Todd offers a good reflection on this: