My reaction to FTX: appalled

I thought I would repost this thread I wrote for Twitter.

I’ve been waiting for the Future Fund people to have their say, and they have all resigned (https://​​​​posts/​​xafpj3on76uRDoBja/​​the-ftx-future-fund-team-has-resigned-1).

So now you can hear what I think.

I am ******* appalled.

If media reports of what happened are at all accurate, what at least two people high up at FTX and Alameda have done here is inexcusable (e.g. https://​​​​articles/​​ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732).

Making risky trades with depositors’ funds without telling them is grossly immoral.

(I’m gripped reading the news and Twitter like everyone else and this is all based on my reading between the lines of e.g.: https://​​​​astridwilde1/​​status/​​1590763404851281920, https://​​​​jonwu_/​​status/​​1590099676744646656, https://​​​​content/​​593cad86-683c-4444-ac7b-c5c875fb4d95, https://​​​​articles/​​binance-is-said-to-be-likely-to-walk-away-from-deal-to-buy-ftx-11668020963

I also speak only for myself here.)

Probably some story will come out about why they felt they had no choice, but one always has a choice to act with integrity or not to.

One or more leaders at FTX have betrayed the trust of everyone who was counting on them.

Most importantly FTX’s depositors, who didn’t stand to gain on the upside but were unwittingly exposed to a massive downside and may lose savings they and their families were relying on.

FTX leaders also betrayed investors, staff, collaborators, and the groups working to reduce suffering and the risk of future tragedies that they committed to help.

No plausible ethics permits one to lose money trading then take other people’s money to make yet more risky bets in the hope that doing so will help you make it back.

That basic story has blown up banks and destroyed lives many times through history.

Good leaders resist the temptation to double down, and instead eat their losses up front.

In his tweets Sam claims that he’s working to get depositors paid back as much as possible.

I hope that is his only focus and that it’s possible to compensate the most vulnerable FTX depositors to the greatest extent.

To people who have quit jobs or made life plans assuming that FTX wouldn’t implode overnight, my heart goes out to you. This situation is fucked, not your fault and foreseen by almost no one.

To those who quit their jobs hoping to work to reduce suffering and catastrophic risks using funds that have now evaporated: I hope that other donors can temporarily fill the gap and smooth the path to a new equilibrium level of funding for pandemic prevention, etc.

I feel it’s clear mistakes have been made. We were too quick to trust folks who hadn’t proven they deserved that level of confidence.

One always wants to believe the best about others. In life I’ve mostly found people to be good and kind, sometimes to an astonishing degree.

Hindsight is 2020 and this week’s events have been frankly insane.

But I will be less trusting of people with huge responsibilities going forward, maybe just less trusting across the board.

Mass destruction of trust is exactly what results from this kind of wrong-doing.

Some people are saying this is no surprise, as all of crypto was a Ponzi scheme from the start.

I’m pretty skeptical of crypto having many productive applications, but there’s a big dif between investing in good faith in a speculative unproven technology, and having your assets misappropriated from you.

The first (foolish or not) is business. The second is illegal.

I’ll have more to say, maybe after I calm down, maybe not.