Thoughts on FTX and returning to our ideals

[michel]

I can’t work today. I knew I wouldn’t be able to work as soon as I woke up. The ordinary tasks I’d dedicate myself to feel so distant from the shitshow unfolding as I sit at my desk.

The news of FTXs unraveling hit me hard. Most immediately, I feel for the people who entrusted their life savings to an organization that didn’t deserve their trust.

It’s easy to extrapolate from the twitter updates I scroll past of people’s net worth halving in hours, of people frantically trying to withdraw money they’re not sure exists anymore: people’s lives just got ruined. Families will struggle to send their kids to college. Young adults will need to take on new jobs to stay afloat. Poor parents who looked at FTX for a way out will lose their trust and so much more in a system that continues to fail them. I hope those responsible for gambling money that wasn’t theirs to gamble are held responsible, and I dearly hope FTX can find a way to repay the people who trusted them.

I grieve for those who trusted in FTX, and that includes people in the effective altruism community. We’re not the victims – we benefited incredibly from Sam Bankman–Fried and others at FTX over the past years. But, to my knowledge^[1], we had no idea that what appears to be fraud at this level was a possibility when we signed onto a billionaire’s backing. Money changes the world, and I don’t hate us for getting it. Up until this week, I had a very favorable impression of Sam Bankman-Fried. I saw him as an altruist who encapsulated what it meant to think big. No longer; doing good means acting with integrity. This feels like the moment that you learn that a childhood hero of yours might be no hero after all.

A lot just changed. Projects from people in the effective altruism community that I think would have genuinely improved the world, like pandemic preparedness initiatives and charity startups, may be delayed for years – or never arrive at all. Our community’s entire trust networks, emphasis on ambition, and expectation that standout ideas need not be held back my insufficient funds feel as if they’re beginning to shake, and it’s not clear how much they’ll withstand over the coming months. At a personal level, too, those grant applications I’ve been waiting on to fund my past months of independent work seem awfully precarious. I know I’ll be fine, but others won’t be, including the people alive today and far beyond tomorrow who aspiring effective altruists are trying to help.

That’s something that weighs on me: while so much feels like it’s changed, the problems in this world haven’t. People will still die from preventable diseases today; we’ll still experience a background noise of nuclear armageddon threats tomorrow; and emerging technologies coming in the next decades could still pose a threat to all sentient life.

It’s in this context – a community that implicitly trusted FTX in their efforts to do good being shaken up and the world’s problems staying awfully still – that I’m drawn back to effective altruism’s core project: trying to improve the world as much as we can with the resources that we have.

Amidst everything shaking right now, I notice my personal commitment to effective altruism’s ideals standing still. And I can picture my friends’ commitments to effective altruism’s ideals standing steadfast too. Over the past two years, engaging with this community has introduced me to some of the most incredible, kind-hearted people I know. I haven’t talked to many of them as I’ve tried to gather my thoughts over the past day, but I bet they too are still committed to creating a world better than the one they were born into.

Absolutely, we’ll all need to reassess how we bring our altruistic projects to life and who we trust to back us. I’d be surprised if we don’t uncover mistakes our community made over the past months, and I understand if people come to hate us by association with FTX. But I hope that if people outside the effective altruism community look closely, they’ll see that we too are upset, that we don’t endorse the ends justifying the means, and that behind the name “EA” there’s a group of people who really fucking care.

I’ll take some time away from work today, but I hope to get back to it soon.

1. ^

   How much EA leaders knew about the business dealings that preceded FTXs downfall is a key question we need to be asking ourselves right now. I think we need to be very transparent here.

[Kaleem]

Thank you for writing this—it articulates so many things that I have also been feeling and thinking over the past few days, in a way that I wouldn’t have been able to. I hope I’m not mistaken in sensing that you hold some optimism and hope even during this tumultuous time—if so, you’re not alone. I think that fellow EAs who resonate with these sentiments will emerge at the end of this storm with the same convictions and moral beliefs that lead us here, and that things will be ok.

[Sam Elder]

This is a good start. But in my opinion, the questions we need to wrestle with are more structural.

For instance, when EA (as a collection of institutions and individuals) was considering taking donations from a single donor to the extent SBF offered, what due diligence did we attempt to go through of the business practices of Alameda and FTX? Was this failure a case of blind trust, a coordination failure (surely Sequoia Capital did their due diligence…), or a known, calculated risk?

I see a lot of attempts to clarify that fraud is bad. But if we actually believe that, what attempts have there been to actually check whether fraud was occurring until this week? If we were genuinely caught off-guard, what did we previously believe about the actual business of FTX?

It seems like at the very least our baseline expectation should have featured a much higher degree of skepticism than seems to have been brought to the whole endeavor of entrusting a decent chunk of the financing and reputation of the entire EA movement to an offshore crypto business.

[DaneelO]

I agree. A common trope in EA is that we don’t just give money to any charity because it “feels good”, we want it to be effective so we investigate and analyze deeply before giving. In same vain, if we want to prevent bad things from happening we need to implement well structured institutions and perform due diligence, even if it “feels less good” than trusting without verifying does.

[Sam Elder]

Yes, we need to apply similarly rigorous analysis to our (major) sources of funding as we do to the destinations of that funding.

[michel]

Yup, I agree. This post was written as a more personal response to a disorienting situation.

Let the investigations and reevaluations ensue.

[leosn]

I work in crypto media. Worth noting that EA didn’t just benefit from FTX, it created FTX. Jaan loaned Alameda $50m to do the original Bitcoin arbitrage, FTX founded on the back of that with nigh a dozen EAs. Source from Sequoia archives blog below https://​​archive.ph/​​qFJJN#selection-163.0-168.0

[Will Bradshaw]

Thank you for writing this.

[pete]

I cleared my calendar yesterday just to grieve. I relived losing family to the pandemic, thinking of all the resources lost for pandemic prevention.

It’s true that there’s work to be done, but grief is heavy, and if we don’t deal with it honestly we’ll pay dividends later.

[Miguel]

As a guy who failed a business 5 years ago, accepting the situation for what it is—no matter how hard it is have helped me go to the next step. Losing money is the sublayer of the issue but the bigger downfall can rise from us losing our values that kept us moving towards the right direction. There is no one size fits all acceptance mechanism but the sooner one gets to admit how painful a certain situation is—the faster the recovery will be..