The relative silence on FTX/​SBF is likely the result of sound legal advice

The purpose of this post is to explain why I think we should expect to hear very little, if anything, about the FTX/​SBF fiasco from any EA public figures or institutions, and why I wouldn’t read anything into that other than that folks are receiving good legal advice and appropriately following it.

A little about me and why I’m writing this

A little background on me, as this is my first real post here (gulp!) after lurking on and off for a long time. I recently resigned from the partnership of a big international law firm based in the US so I could take some time off. During my 16ish-year career as a big firm lawyer, my practice often focused on plaintiff-side restructuring-related litigation, including cases stemming from some of the biggest financial blow-ups in US history. Early in my career, I worked on litigation about deceptive lending practices at Enron. I then spent the better part of a decade working on litigation against the big money center banks by creditors of Lehman Brothers. I was also involved in litigation against the banks by the Federal Housing Finance Agency, after it took over Fannie Mae and Freddie Mac.

I’ve been what I’ll call EA-adjacent for a long time, but I’ve recently gotten more involved. For the past few months during my time off, I’ve been meeting as many lawyers and other mid-career folks in the EA community as I can (hi to those I’ve met!), and I’ve pitched in on a few projects led by others. I was informed on November 2 that I would receive funding for my own project from the FTX Future Fund. I obviously don’t expect to see that funding now. I’m upset and sad about that. I’m really excited about the project, and while I can do some of it by donating my time to it, some of it really does require a bit of funding that I’m not sure I can get now. That sucks, and I’m still working out how I feel about it.

Obligatory “this is not legal advice” throat clearing

I’m not acting as anyone’s lawyer here, and I don’t want to (at least right now with respect to these issues). Nothing in this post is legal advice. This is just my two cents, off the top of my head, based entirely on my experience and no research at all.

Why it’s best for folks not to comment on the FTX/​SFB situation, and not just for their own sake

I don’t know anything about the FTX/​SBF situation other than what’s in the public record, which I’ve been following closely as it develops. My thoughts here are inspired a bit by this post by Shakeel Hashim and this one by Holden Karnofsky, and the comments to each, but it’s also a response more generally to frustration I’ve seen here and on Twitter about the fact that many public figure EAs and senior folks at EA institutions are not directly addressing the FTX/​SBF situation as much as some would like.

Lawyers almost always advise both individual clients and folks representing client entities not to speak to anyone, including friends and family, about ongoing litigation or any facts and circumstances likely to lead to litigation, including bankruptcy proceedings. People often feel frustrated by being “muzzled” in this way—especially where a narrative is establishing itself publicly that they see as casting them in a negative light. I suspect many are feeling that way right now about FTX/​SBF and how the press is reporting on it. But smart people will continue to follow their lawyers’ advice. There are good reasons for this, including many that go beyond self-interest.

I’ve seen most of the self-interest angles addressed elsewhere, but I’ll say a bit about it just to drive the point home. Being involved in litigation, even as a totally blameless witness—or even a perceived witness who in fact has no relevant knowledge at all—is expensive, time consuming, emotionally taxing, and unpleasant. Even cheap lawyers cost hundreds of dollars an hour these days and often bill in increments of .1 hours for their time. Anyone who gets caught up in court proceedings can expect to pay such a lawyer (or have their employer do so) for many hours of time to help them produce documents and communications (or formally object to having to do so) and then prepare them to be grilled for many more hours by another well-paid professional interlocutor with goals and motives at best orthogonal to their own, if not outright hostile. And that’s often the best-case scenario for someone who piques the interest of one of the many professionals who will be scouring the record in a case like this. It goes downhill from there. The best way to avoid all of this is to say as little as possible and stay off the radar as much as possible.

This unpleasantness is magnified greatly in situations where one of those professionals finds something someone has said that is (even innocently) false or misleading, or that contradicts something else the person said or did previously. And many, many experienced lawyers will be looking at basically everything everyone has said or done even remotely related to the FTX/​SBF blow-up, even in private conversations, as discovery[1] in a case like this is usually broad and comprehensive. Again, the best way to handle this is to say as little as possible of any relevance to anyone, as soon as it becomes clear the situation will be under this kind of intense scrutiny.

People can even find themselves under a microscope not because of something they said, but because of something someone else said to or about them. This is just one of the ways that staying quiet is best even beyond self-interest. Communicating with others could lead to someone on the other end of the communication getting caught up in things more than they otherwise would have. And any public recitation of the facts that would be useful to anyone in the community would require discussing the actions of other people, including blameless people, or explaining situations in such a way that sharp people scouring the record can easily infer identities. Doing so even with perfect recollection could harm not only those individuals but people around them in ways that are impossible to predict, and nobody’s recollection is perfect.

Everyone’s memory is faulty to some degree, and people talking about the past almost always make mistakes, saying things that are not entirely accurate or conflict with other things they’ve said or done in other contexts. Even if such a misstatement is a totally innocent mistake, it can be made to look nefarious in the hands of a smart lawyer acting appropriately zealously in the interests of another stakeholder. There are subtler versions of this, too. Even the smartest people I’ve represented often had difficulty distinguishing in their minds between (i) what they knew from direct experience during the time prior to a dispute arising and (ii) what they learned or inferred later after the issues were reported in the press. This can make even totally truthful statements about what someone “knows” now unintentionally misleading because it can appear someone knew fact X months or years ago, when in fact they learned it recently through the press and got it mixed up in their minds.

Not only can any of these circumstances (and I’m sure many more I’m not thinking of as I dash this off) be harmful to the person communicating or the people being communicated to or about, but there are also other, indirect potential harms worth considering. Misunderstandings can lead to wasted time by litigants and the court. This can harm creditors who already lost money by forcing them to pay professionals more than they would otherwise have to because they’ll be dealing with a muddled record or following rabbit trails that go nowhere useful. And because the professionals working to administer the bankruptcy estate are paid out of estate assets, this can harm creditors even if they are not separately represented by further diminishing the assets available to repay folks through the restructuring or liquidation process.

How I’m moving forward

The legal proceedings around FTX and SBF will continue, much of it in public and reported on by the press, and the story will come out. The fact finding that happens in big bankruptcies like this is imperfect, of course, but it’s the system we have for a reason. All of this will happen more slowly than we’d like, but it’ll happen. I’ll be watching and reading along with everyone else while I work with my new friends and collaborators to find alternate funding for the projects I’ve been helping with that were funded by (or about to be funded by) FTX Future Fund money. And I’ll be thinking about ways the EA community can prevent something like this from happening again or at least limit the harm if it does.

In the meantime, the only inference I’m drawing from the relative silence of public figure EAs and the big EA institutions is that they are receiving sound legal advice not to comment and are following it, as they should. I suspect many are as frustrated by receiving and following this advice themselves as others are by the resulting silence. It sucks, but that’s where we are.

[1] “Discovery” refers to the process by which lawyers for parties to litigation use court processes to gain access to relevant documents and testimony, including emails, chats, texts, and anything else that is relevant to the litigation, using the power of the court to compel production of any information not provided voluntarily.