Charges against BitMEX and cofounders
You may have read recent reports that the U.S. Commodity Futures Trading Commission and Department of Justice have filed charges (announcements here and here) against the cryptocurrency exchange BitMEX and several people involved with the company. This includes Ben Delo, a major EA donor and a cofounder of BitMEX.
CEA, Effective Giving UK, and 80,000 Hours became aware of the charges yesterday, when the news was first reported. No findings have been made about these charges at this point. We will continue to watch how things unfold and learn more, and will continue to update the EA community.
[Conflict disclosure: A charity on whose board I sit, the Legal Priorities Project, has been funded by Ben Delo. I write solely in my personal capacity.]
I think most EA organizations should have a very high standard for outright rejecting donorsâ gifts on the basis of the donorsâ wrongdoings. In particular, even if Ben Delo is guilty of everything heâs charged with doing, I donât think EA charities should reject his donations on that basis. (I know that CEA has not yet said it would do so or recommend doing so; just proactively voicing my opinion in case thatâs under consideration.)
For one thing, it seems pretty antithetical to EAâand the stakes of the work we purport to engage inâto reject money on such a basis. We care about doing good effectively, and more money is useful to doing that. We should be very reluctant to give up free money, especially if the counterfactual is the money is spent less effectively or selfishly. If, as we often suppose, it costs about $3,000 to save a life through GiveWell, it seems very implausible to me that whatever good comes from rejecting a donation of that size must be vastly outweighed by the good that can be accomplished by those donations. Indeed, itâs not clear to me that EA even has a legitimate inherent interest in this caring about a donorâs identity at all, without anything more.
I also think a standard of rejecting people on the basis of their wrongdoings is morally suspect. I really think we should avoid judging people on the basis of the worse thing theyâve done, even if that worst thing is criminal. Furthermore, as most people would probably agree, legality and criminality are imperfect indicators of morality, and so making donor-relations decisions on that basis seems slippery without more. This is especially true for malum prohibitum crimes.
Furthermore, even criminals or overall-bad-people should be allowedâand encouraged!âto engage in morally good actions, including donating to effective charities. Itâs very unclear to me what good can come of a blanket policy against rejecting donations from such individuals, and it risks depriving them of the opportunity to do good things, including as acts of penance or out of a genuine desire for moral growth.
Relatedly, EAs are often appropriately more risk-tolerant than others. Legal risk is one important type of risk; I donât see it as categorically different from other risks. I recall Tara Mac Aulayâs 80K interview, where she noted:
I donât think we want to encourage a culture in which EAs stridently minimize all legal risks, because that can impede effectiveness! While we (and major EA organizations) may want to refrain from encouraging such risky behavior, I donât think assumption of such risks in pursuit of the greater good should be grounds for total rejection of donations (just as it wouldnât be for other forms of risk). We donât want to do shun would-be Robin Hoods.
I do see a few reasons why a charity might reasonably worry about things like this:
PR risks.
Worrying about effects on the charityâs incentives or culture.
Worrying about whitewashing the donorâs past deeds.
Worrying about accepting âblood money.â
Worrying about the transaction being voided as a fraudulent transfer/âvoidable transaction
(1) is of course a legitimate worry, but I think EAs rightfully donât weigh PR as highly as other charities/âmovements, especially when the PR concerns are not founded in good moral reasoning. If we think that accepting donations from people convicted of crimes is better for the world, I may prefer us to stand by our convictions. Regardless, anonymization can obviously mitigate some (most?) of these risks.
(2) is also a very legitimate worry, but it seems like it should be solvable through either anonymizing donations or having an ethical firewall between those who know major donorsâ identities and those who set organizational priorities. For people who have engaged in violent or otherwise-repugnant behavior (such that employees/âvolunteers/âothers have good reason to want to not be around them), then simply excluding the donor (and even their name and likeness) from spaces should be sufficient.
(3) is a bit more complex, but would also be solved with anonymization. Iâm actually not sure that the worry is a well-founded one, since it seems like a personâs good acts are morally relevant to assessing that personâs overall goodness in light of bad acts. But if we donât want to be complicit in that process, then precluding attribution should solve the problem.
Iâm not sure I have a good working theory of how to deal with (4), other than to say I think it would be perfectly reasonable for any charity to assume that any anonymous donation was not the fruits of some heinous crime (as is almost always true). Furthermore, even if it was, itâs not clear to me what good for the world is accomplished by precluding a person who is by supposition bad from getting rid of her money: bad people should probably have less money, not more.
Iâm not an expert on (5), so maybe thatâs whatâs driving this.
Thus, in all cases except (5), anonymization would seem to do a good job of protecting charitiesâ legitimate interests while also allowing for more donations to go through. CEAâs efforts to deanonymize donor identity are therefore a bit puzzling to me. Unless (4) and (5) are doing a lot of lifting, Iâm not sure I see the reasons for CEAâs worries in this particular case or any cases in the same ballpark.
Justifying potentially bad stuff with âthe stakes of the work EA doesâ feels like a slippery slope and a bit fanatic. There should be principled reasons that holds true for all charities, the cost-benefit approach you use the second part of your comment is better. Related: this thread on whether itâs okay to work in the Tobacco industry.
Some other reasons I am uncomfortable with rejecting donations on such a basis:
It seems inconsistent with the less-punitive approach to crime that EA orgs like Open Phil are supporting
I donât think what Delo did, even assuming he is guilty, is morally worse than many behaviors that are (properly) tolerated among EAs, like a lifetime of eating factory-farmed meat
As an addendum of2) and 4), FWIW, on the object-level Iâm not particularly convinced that Ben Delo has acted particularly immorally (though I have not looked in detail at the allegations).
If we were to conflate morality with legality, we would also believe that eg anti-animal agriculture activists are evil terrorists, and that open science is similarly evil. Moreover, since there is not a particularly strong principled reason to privilege US/âUK law as moral guidance over the laws of other countries, we should take seriously the possibility that we should revise our views based on the legal doctrines of other countries, which may have some counter-intuitive results.
Strongly agree. Itâs what I was getting at with the malum prohibitum thing.
Anonymization would probably solve (3), but would, unfortunately, likely create PR risks of its own. Lawrence Lessig made a similar argument a while ago:
Unfortunately, from what I can remember, public response to this argument was overwhelmingly negative, and The New York times (yes, that newspaper) published a story whose headline portrayed Lessig in a very bad light (Lessig subsequently filed a defamation lawsuit against the Times, which he withdrew after the headline was amended four months later). I personally would not have anticipated such a response, since the argument seems pretty reasonable to me, and I wonder if EAs as a whole may be apt to underestimate certain PR risks simply because they rely on their own subjective sense of the merits of the relevant arguments to predict how the broader public and the media will react to them.
Yeah, this is a good point. But this is why I limited my position to setting âa very high standardâ for rejecting donations (and not rejecting cases from people âin the same ballparkâ as Delo, assuming he is guilty, which we should not) and not ânever.â
Also, I think there are some salient differences with the Epstein case, beyond the enormous gulf in moral turpitude implicated by the cases. Ito knew about Epsteinâs identity, and IIRC Epstein had toured the Media Lab. A truly anonymized system should allow for neither of these.
(I also thought the Lessig article was perfectly reasonable.)
Following up on this: I had a conversation that updated me to believe that CEA is doing the right thing here. Unfortunately I canât disclose much about that conversation, but I am posting this here for accountability.
My very quick take:
I think you make a couple of good points, and overall I updated a fair bit into the direction of âaccepting functionally anonymous donations is ~always OK, even if you know the money has morally questionable originâ.
Iâm still not fully convinced, and suspect there are realistic cases where at least initially Iâd be fairly strongly opposed to taking such donations.
Iâm not sure if I can fully justify my intuition /â if the things Iâm going to say are actually its main drivers, but at first glance I see two reasons to be hesitant:
Iâd guess that in practice it can be very hard to implement the level of anonymity you suggest. E.g. relationships to large donors in practice are often handled by senior staff who do have influence over the orgâs strategic direction.
This is partly due to common (actual or perceived) donor preferences.
But it also makes sense from the orgâs perspective: e.g. knowing the details about the relationships to large donors is fairly relevant when doing risk management. But for a holistic risk management you also need to look at other information thatâs quite dispersed throughout the org; certainly org leadership needs to be involved. So the org has an incentive that might preclude setting up the kind of âfirewallsâ you advocateâand when they are in place, there will be incentives to subvert them, which seems like a bad/ârisky setup.
I think that outside perceptions are a quite significant obstacle, for reasons that go beyond âPR risksâ in a narrow sense. My sense is that the stakes in the arena of âmoral/âpolitical signalingâ are quite high for many actors, in particular if you rely a lot on informal cooperation based on perceptions of hard-to-verify shared interests. And whom you take money from will often be quite significant in that arena.
One issue here is that the level of anonymization /â protection from adverse incentives you advocate will often be hard to verify from the outside.
If I know that charity X has received a substantial donation from Y, my prior will be that Y has significant influence over X. In typical cases, it would be quite costly (in terms of time, but potentially also inside/âsensitive information that would need to be shared) to convince me that this is not the case.
Another significant issue is a kind of âcontagionâ due to higher-order social reasoning: Suppose I know that charity X has received a substantial donation from Y. Suppose further that I know that Xâs relationship to Z is relevant for Xâs ability to achieve its mission (think e.g. X = MyAISafetyOrg, Z = DeepMind). Even if Iâm personally not that concerned about accepting donations from Y, I might still be concerned that X made a bad move if I think that Z would disapprove of getting funded by Y. âBad moveâ here might refer to a narrow sense of competence, but also again to âmoralâ/âinfluence issues: if it seems to me that X is willing to accept the cost that most others are going to worry if Y has influence over X, this makes it seem more likely that Y in fact has influence over X.
Consider also that if it would be costly for X to publicly acknowledge it accepted a donation from Y, then in virtue of this very fact accepting an anonymous donation from Y gives Y influence/âleverage over X (because Y can threaten to disclose their donation).
My impression is that related concepts like âvirtue signallingâ are often discussed in a derogatory fashion in the EA sphere. Iâd like to therefore add that when I said âmoral/âpolitical signallingâ Iâm not thinking of arguably excessive/âpathological cases from, say, highly public party politics as central examples. Iâm more thinking of the reasons why âintegrityâ (and, for philosophers, Strawsonian âreactive attitudesâ) is a thing /â an everyday concept, and of credibility/ââimproving oneâs bargaining positionâ.
(Similarly, note that âfollow the moneyâ is a common heuristics.)
Someone pointed out to me that money laundering prevention due diligence could be another reason, especially for conditional grants or organizations like CEA that regrant.
Hereâs an update from CEAâs operations team, which has been working on updating our practices for handling donations. This also applies to other organizations that are legally within CEA (80,000 Hours, Giving What We Can, Forethought Foundation, and EA Funds).
âWe are working with our lawyers to devise and implement an overarching policy for due diligence on all of our donors and donations going forward.
Weâve engaged a third party who now conducts KYC (know your client) due diligence research on all major donors (>$20K a year).
We have established a working relationship with TRM labs who conduct compliance and back-tracing for all crypto donations.â
Is the idea that such controls, had they been implemented in the past, would have prevented you from accepting Deloâs donations?
Also, I am curious to see CEAâs cost-benefit analysis behind this decision. Naively this seems like incurring a cost (staff time, consultant fees, lawyer fees, annoy donors) in order to reduce a benefit (donations). Based on my cursory research (talking to a lawyer and reading this) I couldnât work out if this was actually legally required given CEAâs situation, though it does seem to be reasonably common.
I am checking with operations staff about this.
I donât want this comment to read as all commentary on Delo or BitMEX specifically; weâre also thinking about how to be prepared for other situations that could arise. [Edited for clarity]
A lot of whatâs happening here is CEA realizing that there are a lot of potential donors who make money in crypto or other emerging fields where society is still trying to figure out how to apply legal and ethical frameworks. We need better systems for thinking about that. Many of the steps CEA is taking or considering are not strictly legally required, but thatâs not our only consideration.
EA has long included the idea that some ways of making money could create net negative impact even if you donate your earnings, for example 80,000 Hoursâ post on Why you should avoid harmful jobs even if youâll do more good.
There are other ways of making money that donât reach that bar, but that involve enough harm that their overall effect could be really damaging to EA, for example by spreading a norm that it doesnât really matter whether you make your money in an ethical way as long as you donate it afterwards.
CEAâs guiding principles include this section on integrity:
Because we believe that trust, cooperation, and accurate information are essential to doing good, we strive to be honest and trustworthy. More broadly, we strive to follow those rules of good conduct that allow communities (and the people within them) to thrive. We also value the reputation of effective altruism, and recognize that our actions reflect on it.
Well you did announce the policy change as a comment on an article about Delo!
I think (?) I may have pointed this out previously, but there are some significant issues with this article. For example, it suggests a $42,000 average social cost of jobs in finance:
But if you follow the source link, you can see that this estimate is actually for only the 10% most harmful jobs:
So the average harm is 10x less, i.e. $4,200.
Even then, I think this is quite a poor estimate. It relies on ascribing all the expected costs of financial crisis to financial workers. However, a huge deal of the responsibility should surely be borne by other actors. Depending on your views of the causes of the crisis, some collection of these groups are quite responsible:
Politicians who passed regulations like the community reinvestment act.
Regulators who focused on solvency over liquidity.
The Federal Reserve for excessively tight monetary policy.
Individual borrowers who knowingly mis-stated their ability to repay.
Investors in ABS CLOs or Prime MMFs who did not do their due diligence.
Academics who over-emphasised normal distributions and ignored skew/âkurtosis.
Furthermore, it does not assign any monetary value to the positive aspects of finance, even though these are probably very large:
Banks allow people to save money without being afraid it will be stolen by burglars.
Credit card networks allow us to purchase things without needing to carry cash.
Paypal allows us to buy things from merchants who are not physically nearby.
The stock market provides signals to investors about where would be useful to invest their money.
Companies can raise money in order to grow much more quickly than they would otherwise.
The bond market allows governments to borrow money to finance additional spending during recessions and pandemics.
(etc.)
Similarly, the article suggests that being a Tobacco CEO is unacceptable, linking to this analysis. However, I think the fermi calculation involved in this estimate was quite far off, as I explained here:
At the time Rob suggested he would think more on the issue, but to my knowledge the analysis was never updated.
Sorry, I mean my most recent comment specificallyâthe reasons weâre considering these kinds of changes are not just because of this one situation but also because of others that could arise. Iâll edit to clarify.