If you received FTX grant money you should return it

Non-EA person here, giving an outsider’s take on the handwringing about whether to return grant money received from FTX. The hypocrisy is rich.

  1. All grant money received from FTX should be returned to the FTX bankruptcy estate. It is dirty money, the proceeds of FTX’s criminal fraud. Real people have been victimized by FTX. Return the grant money back to the bankruptcy estate so that it can be distributed to FTX’s legitimate creditors/​customers. Yet few on this EA forum will say that the money should be returned.

  2. Keeping FTX grant money is ratifying the criminal fraud. It is remarkable the handsprings grant recipients are doing to rationalize keeping the money. All EA ideals have been thrown out the window. Instead, grant recipients are focused on “Can I be legally forced to return the grant money?” and “Can the bankruptcy estate legally claw the money back?” The answer they all want to hear and are fishing for is “You can legally keep the grant money.” In other words, their thinking is that if they cannot be legally forced to disgorge the grant money then they are justified in keeping it, and they will then keep the money. There is nothing EA about that. Rather, it is entirely self-serving.

  3. As a corollary, there is a lot of special pleading going on. EA people are implying they are justified in keeping the dirty grant money because, as a sample: (a) variations on “I didn’t know that FTX was defrauding anyone”; (b) variations on “I’m only going to use the grant money to pay employee salaries”; arguing that the FTX Foundation is not an entity in bankruptcy, i.e., trying to do some fine legal parsing; and, (d) variations on “I only got a small grant, so it doesn’t really matter and maybe the bankruptcy estate won’t try to claw it back anyway.”

a. One poster even argued that when he took a grant from FTX he had necessarily given FTX ‘equivalent value’ (the potential magic words to avoid a clawback) - the claimed ‘equivalent value’ being enhancing FTX’s reputation. Thus do EA’s high ideals reduce in practice to attempted weaseling out of responsibility.

  1. Few are willing to say that FTX committed criminal fraud. They all demur that “I am not a lawyer.” Yet when the issue is whether they are legally obligated to return the grant money to the bankruptcy estate, without hesitation they transform into armchair lawyers, delving into whether second-level clawbacks are permitted under the bankruptcy code, the exact period of time a clawback reaches back (is it three months or 90 days?), and the differences between a 90-day clawback and a two-year fraudulent transfer avoidance.

  2. The EA forum expresses almost zero empathy for the individuals who put money/​crypto on the FTX exchange and then were criminally defrauded by FTX. Those people do not seem to count to the EA community. (Note: I have never owned or speculated in any cryptocurrency, and I have no connection in any way with FTX or any other crypto enterprise.)

  3. Why not say it plainly: you want to keep the grant money even though you now know it was and is stolen money. You don’t want to return the money. Perhaps because you personally will face financial hardship if you do. It turns out that money in hand trumps EA ideals.

  4. Again, the right thing to do is straightforward, though not easy: if you received FTX grant money you should return it to FTX’s bankruptcy estate. All of the money.