Jason has made a comments on this issue with a number of points worth considering; I found this thread particularly eye-opening. I came away feeling that the risk of clawbacks shouldn’t be ignored.
Geoffrey Miller also made the important point that “if there are any legal ‘clawbacks’ of money in the future, that would have to be done through official legal channels—and they might not care that we’ve already sent money back somewhere for allegedly honorable reasons. So we might end up returning a bunch of money, and then being legally obligated to return the same amount again, and also being required to pay income tax on whatever we first received.”
More useful information at Tyrone-Jay’s comment here including a note that from Molly that OP intends to share information from its external counsel about clawbacks very shortly.
I’d say people with unspent funds should pay close attention to what OP has to say in the coming days.
Molly suggests that “generally FTX grantees should avoid spending additional $$ on legal advice about this just yet” before reading what OP has to say on the topic, which seems fair enough. But I suspect some people with significant amount of unspent funds may ultimately want to seek legal advice sometime between now and the end of the year.
For individuals, my understanding is that unspent funds that are still on one’s books at the end of 31 Dec may count as “profits” and be taxed accordingly, so “just never spend any of the money” may be difficult in practice.
I worry that this could go badly wrong if an affected individual were to do this, in the following way:
(1) An affected grantee makes statements to FTX which imply that they believe all of the money that they were given rightfully belongs to FTX’s creditors, or could be interpreted in court to imply this
(2) The bankruptcy trustee sends out their routine demand letter. The grantee, having set the money aside, originally thought that they could repay GRANT_SIZE—AMOUNT_SPENT. Unfortunately, their government has treated their grant as income, so they had or will have to pay taxes on the amount that they were unable to deduct. Also, if they aren’t planning on trying to negotiate this settlement personally, they will need to enlist a lawyer, who will want their own chunk of any settlement. So they have to hope that the trustee will settle for (GRANT_SIZE—AMOUNT_SPENT—TAXES_OWED—LAWYER’S_FEES), as they will face financial ruin otherwise.
(3) The bankruptcy trustee, who might otherwise have been perfectly happy to settle for that amount, thinks they can do better, because they have the statement that grantee provided in (1) to wave around in court. Grantee has a much harder time arguing in court that they do not legally and morally owe this creditor GRANT_SIZE, given that the bankruptcy trustee has a document in grantee’s own words seeming to imply that grantee themselves believes they do legally and morally owe this amount. By the way, the creditor the bankruptcy trustee represents is not an original FTX retail or institutional investor at all, but is instead a Wall Street firm that has bought up FTX customers’ bankruptcy rights for pennies on the dollar, looking to turn a profit: https://www.nytimes.com/2022/11/18/business/ftx-assets-wall-street.html . In the end, the grantee might face bankruptcy.
The risks are clearest for individuals. Not sure to what degree an EA community statement similar to (1) would raise analogous risks for grantees or the community as a whole, I don’t really have the legal background to know how such a statement might wind up being deployed in court.
Fully agree that just continuing on with some prior plan to deploy the funds seems like a bad idea.