As of October 2022, I don’t think I could have known FTX was defrauding customers.
If I’d thought about it I could probably have figured out that FTX was at best a casino, and I should probably think seriously before taking their money or encouraging other people to do so. I think I failed in an important way here, but I also don’t think my failure really hurt anyone, because I am such a small fish.
But I think in a better world I should have had the information that would lead me to conclude that Sam Bankman-Fried was an asshole who didn’t keep his promises, and that this made it risky to make plans that depended on him keeping even explicit promises, much less vague implicit commitments. I have enough friends of friends that have spoken out since the implosion that I’m quite sure that in a more open, information-sharing environment I would have gotten that information. And if I’d gotten that information, I could have shared it with other small fish who were considering uprooting their lives based on implicit commitments from SBF. Instead, I participated in the irrational exuberance that probably made people take more risks on the margin, and left them more vulnerable to the collapse of FTX. Assigning culpability is hard here, but this isn’t just an abstract worry: I can think of one person I might bear some responsibility for, and another who I would be almost 100% responsible for, except they didn’t get the grant.
I think the encouragement I gave people represents a moral failure on my part. I should have realized I didn’t have enough information to justify it, even if I never heard about specific bad behavior. Hell even if SBF wasn’t an unreliable asshole, Future Fund could have turned off the fire hose for lots of reasons. IIRC they weren’t even planning on continuing the regrantor project.
But it would also have been cool if that low key, “don’t rely on Sam- I’m not accusing him of anything malicious, he’s just not reliable” type of information had circulated widely enough that it reached me and the other very small fish, especially the ones taking major risks that only made sense in an environment where FTX money flowed freely.
I don’t know what the right way to do that would have been. But it seems important to figure out.
I also suspect that in an environment where it was easy to find out that SBF was an unreliable asshole, it would have been easier to discover or maybe even prevent the devastating fraud, because people would have felt more empowered to say no to him. But that might be wishful thinking.
I think the encouragement I gave people represents a moral failure on my part. I should have realized I didn’t have enough information to justify it, even if I never heard about specific bad behavior.
I don’t know the specific circumstances of your or anyone else’s encouragement, so I want to be careful not to opine on any specific circumstances. But as a general matter, I’d encourage self-compassion for “small fish” [1] about getting caught up in “irrational exuberance.” Acting in the presence of suboptimal levels of information is unavoidable, and declining to act until things are clearer carries moral weight as well.
In retrospect, we know that the EA whispernet isn’t that reliable, that prominence in EA shouldn’t be seen as a strong indicator of reliability, that the media was asleep at the wheel, and that crypto investors exercise very minimial due dillgence. But I don’t think we should expect “small fish” to have known those things in 2021 and 2022.
Hell even if SBF wasn’t an unreliable asshole, Future Fund could have turned off the fire hose for lots of reasons. IIRC they weren’t even planning on continuing the regrantor project.
As far as other potential failure modes, I think an intelligent individual doing their due dilligence before making a major life decision would have spotted those risks. It would have been easy to find out (without relying on inside EA knowledge) that anything crypto is risky as hell, that anything involving a company that has only been in operation a few years is pretty risky on top of that, that SBF didn’t have a long track record of consistent philantrophy at this level, and (in most cases) that the grants were fairly short-term with no guarantee of renewal.
Given that we should be gentle and understanding toward small fish who relied on FTX funding to their detriment, I would extend similar gentleness and understanding toward small fish who encouraged others (at least without actively downplaying risks). So I think there’s a difference between encouragement that actively downplayed those risks, and encouragement that did not affirmatively include a recognition of the relatively high risk.
But it would also have been cool if that low key, “don’t rely on Sam- I’m not accusing him of anything malicious, he’s just not reliable” type of information had circulated widely enough that it reached me and the other very small fish, especially the ones taking major risks that only made sense in an environment where FTX money flowed freely.
I directionally agree, but think it is important to recognize that the signal of SBF’s unreliability would likely be contained in a sea of noise of inaccurate information, accurate information that didn’t predict future bad outcomes, and outright malicious falsehoods. A rational individual would discount the reports, with the degree of discount based on the signal:noise ratio of the whispernet and other factors.
Given the reasons FTX funding could fall through for reasons unrelated to SBF’s character or reliability, I predict that such a signal getting out would have had a meaningful—yet fairly modest—effect on proper risk evaluation by a small fish. For sure, an increase from 30% to 40% risk [making numbers up, but seems roughly plausible?] would have changed some decisions at the margin (either to accept grants or not to take more precautions).
But we would also need to weigh that other decisions would have changed for the worse because of noise in the whispernet about other people. While the tradeoff can be mitigated to some extent, I think it is largely inherent to whispernets and most other reputation-based systems. I generally think that assessing and communicating this sort of risk is very difficult, and that some sort of system for ameliorating the situation of people who get screwed is therefore a necessary piece of the solution. To me, this is similiar to how a rational response to the risk of fire includes both fire prevention (being aware of and mitigating risks) and fire insurance (because prevention is not a foolproof process).
I think expecting myself to figure out the fraud would be unreasonable. As you say, investors giving him billions of dollars didn’t notice, why should I, who received a few tens of thousands, be expected to do better due diligence? But I think a culture where this kind of information could have bubbled up gradually is an attainable and worthwhile goal.
E.g. I think my local community handled covid really well. That didn’t happen because someone wrote a big scary announcement. It was an accumulation of little things, like “this is probably nothing but always good to keep a stock of toilet paper” and “if this is airborne masks are probably useful”. And that could happen because those small statements were allowed. And I think it would have been good if people could similarly share small warnings about SBF as casually as they shared good things, and an increasingly accurate picture would emerge over time.
Am I understanding right that the main win you see here would have been protecting people from risks they took on the basis that Sam was reasonably trustworthy?
I also feel pretty unsure but curious about whether a vibe of “don’t trust Sam / don’t trust the money coming through him” would have helped discover or prevent the fraud—if you have a story for how it could have happened (e.g. via as you say people feeling more empowered to say no to him—maybe it would have via been his staff making fewer crazy moves on his behalf / standing up to him more?), I’d be interested.
“protect people from dependencies on SBF” is the thing for which I see a clear causal chain and am confident in what could have fixed it.
I do have a more speculative hope that an environment where things like “this billionaire firehosing money is an unreliable asshole” are easy to say would have gotten better outcomes for the more serious issues, on the margin. Maybe the FTX fraud was overdetermined, even if it wasn’t and I definitely don’t have enough insight to be confident in picking a correction. But using an abstract version of this case as an example for how I think a more open environment could have led to better outcomes:
My sense is SBF just kept taking stupid unethical bets and having them work out for him financially and socially. Maybe small consequences early on would have reduced the reward to stupid unethical bets.
Before the implosion, SBF(’s public persona) was an EA success story that young EAs aspired to copy. Less of that on the margin would probably lead to less fraud 5 years from now, especially in the world where the FTX fraud took longer to discover.
I think aping SBF’s persona was bad for other reasons, but they’re harder to justify.
SBF would have gotten more push back from staff (unless the fact that he was a known asshole made people more likely to leave, which seems good for them but not an improvement vis a vis fraud).
FTX would have had a harder time recruiting, which would have slowed them down.
Some EAs chose to trade on FTX out of ingroup loyalty, and maybe that would have happened less.
An environment where you’re free to share information about SBF being an unreliable asshole is more hospitable to sharing and hearing other negative information, and this has a snowball effect. Who knows what else would have been shared if the door had been open a crack.
Maybe Will MacAskill would have spent less time telling the press that SBF was a frugal virtue wunderkind.
Maybe other people would have told Will MacAskill to stop telling the press that SBF was a frugal virtue wunderkind.
Maybe Will MacAskill would have pushed that line to the press, but other people would have told the press “no he isn’t”, and that could have been a relatively gentle lesson for SBF and Will.
My sense is Will isn’t the only prominent EA who gave SBF a lot of press, just the most prominent and the one I heard the most about. Hopefully all of that would be reduced.
Maybe people would have been more open when considering if FTX money was essentially casino money, and what are the ethical implications of that?
As of October 2022, I don’t think I could have known FTX was defrauding customers.
If I’d thought about it I could probably have figured out that FTX was at best a casino, and I should probably think seriously before taking their money or encouraging other people to do so. I think I failed in an important way here, but I also don’t think my failure really hurt anyone, because I am such a small fish.
But I think in a better world I should have had the information that would lead me to conclude that Sam Bankman-Fried was an asshole who didn’t keep his promises, and that this made it risky to make plans that depended on him keeping even explicit promises, much less vague implicit commitments. I have enough friends of friends that have spoken out since the implosion that I’m quite sure that in a more open, information-sharing environment I would have gotten that information. And if I’d gotten that information, I could have shared it with other small fish who were considering uprooting their lives based on implicit commitments from SBF. Instead, I participated in the irrational exuberance that probably made people take more risks on the margin, and left them more vulnerable to the collapse of FTX. Assigning culpability is hard here, but this isn’t just an abstract worry: I can think of one person I might bear some responsibility for, and another who I would be almost 100% responsible for, except they didn’t get the grant.
I think the encouragement I gave people represents a moral failure on my part. I should have realized I didn’t have enough information to justify it, even if I never heard about specific bad behavior. Hell even if SBF wasn’t an unreliable asshole, Future Fund could have turned off the fire hose for lots of reasons. IIRC they weren’t even planning on continuing the regrantor project.
But it would also have been cool if that low key, “don’t rely on Sam- I’m not accusing him of anything malicious, he’s just not reliable” type of information had circulated widely enough that it reached me and the other very small fish, especially the ones taking major risks that only made sense in an environment where FTX money flowed freely.
I don’t know what the right way to do that would have been. But it seems important to figure out.
I also suspect that in an environment where it was easy to find out that SBF was an unreliable asshole, it would have been easier to discover or maybe even prevent the devastating fraud, because people would have felt more empowered to say no to him. But that might be wishful thinking.
I don’t know the specific circumstances of your or anyone else’s encouragement, so I want to be careful not to opine on any specific circumstances. But as a general matter, I’d encourage self-compassion for “small fish” [1] about getting caught up in “irrational exuberance.” Acting in the presence of suboptimal levels of information is unavoidable, and declining to act until things are clearer carries moral weight as well.
In retrospect, we know that the EA whispernet isn’t that reliable, that prominence in EA shouldn’t be seen as a strong indicator of reliability, that the media was asleep at the wheel, and that crypto investors exercise very minimial due dillgence. But I don’t think we should expect “small fish” to have known those things in 2021 and 2022.
As far as other potential failure modes, I think an intelligent individual doing their due dilligence before making a major life decision would have spotted those risks. It would have been easy to find out (without relying on inside EA knowledge) that anything crypto is risky as hell, that anything involving a company that has only been in operation a few years is pretty risky on top of that, that SBF didn’t have a long track record of consistent philantrophy at this level, and (in most cases) that the grants were fairly short-term with no guarantee of renewal.
Given that we should be gentle and understanding toward small fish who relied on FTX funding to their detriment, I would extend similar gentleness and understanding toward small fish who encouraged others (at least without actively downplaying risks). So I think there’s a difference between encouragement that actively downplayed those risks, and encouragement that did not affirmatively include a recognition of the relatively high risk.
I directionally agree, but think it is important to recognize that the signal of SBF’s unreliability would likely be contained in a sea of noise of inaccurate information, accurate information that didn’t predict future bad outcomes, and outright malicious falsehoods. A rational individual would discount the reports, with the degree of discount based on the signal:noise ratio of the whispernet and other factors.
Given the reasons FTX funding could fall through for reasons unrelated to SBF’s character or reliability, I predict that such a signal getting out would have had a meaningful—yet fairly modest—effect on proper risk evaluation by a small fish. For sure, an increase from 30% to 40% risk [making numbers up, but seems roughly plausible?] would have changed some decisions at the margin (either to accept grants or not to take more precautions).
But we would also need to weigh that other decisions would have changed for the worse because of noise in the whispernet about other people. While the tradeoff can be mitigated to some extent, I think it is largely inherent to whispernets and most other reputation-based systems. I generally think that assessing and communicating this sort of risk is very difficult, and that some sort of system for ameliorating the situation of people who get screwed is therefore a necessary piece of the solution. To me, this is similiar to how a rational response to the risk of fire includes both fire prevention (being aware of and mitigating risks) and fire insurance (because prevention is not a foolproof process).
I’m not intending to offer an opinion about larger fish, or people with more direct information about SBF, either way.
I think expecting myself to figure out the fraud would be unreasonable. As you say, investors giving him billions of dollars didn’t notice, why should I, who received a few tens of thousands, be expected to do better due diligence? But I think a culture where this kind of information could have bubbled up gradually is an attainable and worthwhile goal.
E.g. I think my local community handled covid really well. That didn’t happen because someone wrote a big scary announcement. It was an accumulation of little things, like “this is probably nothing but always good to keep a stock of toilet paper” and “if this is airborne masks are probably useful”. And that could happen because those small statements were allowed. And I think it would have been good if people could similarly share small warnings about SBF as casually as they shared good things, and an increasingly accurate picture would emerge over time.
Am I understanding right that the main win you see here would have been protecting people from risks they took on the basis that Sam was reasonably trustworthy?
I also feel pretty unsure but curious about whether a vibe of “don’t trust Sam / don’t trust the money coming through him” would have helped discover or prevent the fraud—if you have a story for how it could have happened (e.g. via as you say people feeling more empowered to say no to him—maybe it would have via been his staff making fewer crazy moves on his behalf / standing up to him more?), I’d be interested.
“protect people from dependencies on SBF” is the thing for which I see a clear causal chain and am confident in what could have fixed it.
I do have a more speculative hope that an environment where things like “this billionaire firehosing money is an unreliable asshole” are easy to say would have gotten better outcomes for the more serious issues, on the margin. Maybe the FTX fraud was overdetermined, even if it wasn’t and I definitely don’t have enough insight to be confident in picking a correction. But using an abstract version of this case as an example for how I think a more open environment could have led to better outcomes:
My sense is SBF just kept taking stupid unethical bets and having them work out for him financially and socially. Maybe small consequences early on would have reduced the reward to stupid unethical bets.
Before the implosion, SBF(’s public persona) was an EA success story that young EAs aspired to copy. Less of that on the margin would probably lead to less fraud 5 years from now, especially in the world where the FTX fraud took longer to discover.
I think aping SBF’s persona was bad for other reasons, but they’re harder to justify.
SBF would have gotten more push back from staff (unless the fact that he was a known asshole made people more likely to leave, which seems good for them but not an improvement vis a vis fraud).
FTX would have had a harder time recruiting, which would have slowed them down.
Some EAs chose to trade on FTX out of ingroup loyalty, and maybe that would have happened less.
An environment where you’re free to share information about SBF being an unreliable asshole is more hospitable to sharing and hearing other negative information, and this has a snowball effect. Who knows what else would have been shared if the door had been open a crack.
Maybe Will MacAskill would have spent less time telling the press that SBF was a frugal virtue wunderkind.
Maybe other people would have told Will MacAskill to stop telling the press that SBF was a frugal virtue wunderkind.
Maybe Will MacAskill would have pushed that line to the press, but other people would have told the press “no he isn’t”, and that could have been a relatively gentle lesson for SBF and Will.
My sense is Will isn’t the only prominent EA who gave SBF a lot of press, just the most prominent and the one I heard the most about. Hopefully all of that would be reduced.
Maybe people would have been more open when considering if FTX money was essentially casino money, and what are the ethical implications of that?