There are various reasons to believe that SBF’s presence in EA increased the chance that FTX would happen and thrive:
Only ~10k/10B people are in EA, while they represent ~1/10 of history’s worst frauds, giving a risk ratio of about 10^5:1, or 10^7:1, if you focus on an early cohort of EAs. This should give an immediate suspicion that P(FTX thrives | SBF in EA)/P(FTX thrives | SBF not in EA) is very large indeed.
Sam decided to do ETG due to conversations with EA leaders.
EA gave Alameda a large majority of its funding and talent.
EA gave FTX at least 1-2 of the other leaders of the company.
ETG was a big part of Sam’s public image and source of his reputation.
Only ~10k/10B people are in EA, while they represent ~1/10 of history’s worst frauds, giving a risk ratio of about 10^5:1, or 10^7:1, if you focus on an early cohort of EAs.
This seems wildly off to me—I think the strength of the conclusion here should make you doubt the reasoning!
I think that the scale of the fraud seems like a random variable uncorrelated with our behaviour as a community. It seems to me like the relevant outcome is “producing someone able and willing to run a company-level fraud”; given that, whether or not it’s a big one or a small one seems like it just adds (an enormous amount of) noise.
How many people-able-and-willing-to-run-a-company-level-fraud does the world produce? I’m not sure, but I would say it has to be at least a dozen per year in finance alone, and more in crypto. So far EA has got 1. Is that above the base rate? Hard to say, especially if you control for the community’s demographics (socioeconomic class, education, etc.).
There are various reasons to believe that SBF’s presence in EA increased the chance that FTX would happen and thrive:
Only ~10k/10B people are in EA, while they represent ~1/10 of history’s worst frauds, giving a risk ratio of about 10^5:1, or 10^7:1, if you focus on an early cohort of EAs. This should give an immediate suspicion that P(FTX thrives | SBF in EA)/P(FTX thrives | SBF not in EA) is very large indeed.
Sam decided to do ETG due to conversations with EA leaders.
EA gave Alameda a large majority of its funding and talent.
EA gave FTX at least 1-2 of the other leaders of the company.
ETG was a big part of Sam’s public image and source of his reputation.
This seems wildly off to me—I think the strength of the conclusion here should make you doubt the reasoning!
I think that the scale of the fraud seems like a random variable uncorrelated with our behaviour as a community. It seems to me like the relevant outcome is “producing someone able and willing to run a company-level fraud”; given that, whether or not it’s a big one or a small one seems like it just adds (an enormous amount of) noise.
How many people-able-and-willing-to-run-a-company-level-fraud does the world produce? I’m not sure, but I would say it has to be at least a dozen per year in finance alone, and more in crypto. So far EA has got 1. Is that above the base rate? Hard to say, especially if you control for the community’s demographics (socioeconomic class, education, etc.).
I estimated that 1-2% of YCombinator-backed companies commit substantial fraud. It seems hard to make the case that the rate in EA is 10^7x this.