Discourage EA billionaires from being public advocates for EA since this makes them the face of EA and increases reputational risk. (Musk tweeted about EA once and seems like the face of EA to some people!)

I’ve seen numerous articles about SBF’s EA involvement and very few about Dustin Moskovitz, so I think Dustin Moskovitz made the right call here.

Updated

We unreasonably narrowed our probability space. As Violet Hour says below win somehow discounted this whole hypothesis without even considering it. Even a 1% chance of this massive scandal was worth someone thinking about it full-time. And we dropped the ball.

There have been calls for a proper whistleblowing system within EA. I guess if I'd had someone I could report to as there is for community issues, then perhaps I would have.

I made a prediction market, did a little investigating, but I didn't really see a way to do things with the little suspicions I had. That seems pretty damning.

Make it clearer that EA is not just classical utilitarianism and that EA abides by moral rules like not breaking the law, not lying and not carrying out violence.

(Especially with short AI timelines and the close to infinite EV of x-risk mitigation, classical utilitarianism will sometimes endorse breaking some moral rules, but EA shouldn’t!)

A coordination mechanism around rumours.

I now here that there were many rumours around bad behaviour at Alameda. If there are similar rumours around another EA org or an individual, how will we ensure they are taken seriously.

Had we spent $10M investigating stuff like this, had it only found this one case, it would have been worth it (without second order effects, which are hard).

A good policy change should be at least general enough to prevent Ben Delo-style catastrophes too (a criminal crypto EA billionaire from a few years back.) Let's not overfit to this data point!

One takeaway I'm tossing about is adopting a much more skeptical posture towards the ultra-wealthy, by which I mean always having your guard up, even if they seem squeaky-clean (so far). With the ultra-wealthy/ultra-powerful, don't start from a position of trust and adjust downwards when you hear bad stories; do the opposite.

It can’t be right to cut all ties to the super-rich, for all the classic reasons (eg the feminist movement was sped up a lot by the funding which created the pill). Hundreds of thousands of people would die if we did this. Ambitious attempts to fix the world’s pressing problems depends on having resources.

But there are plenty of moderate options, too.

Here's three ways I think learning to mistrust the ultra-wealthy could help matters.

A general posture of skepticism towards power might have helped whenever someone raised qualms about FTX, or SBF himself, such that the warnings wouldn't have fallen on deaf ears and could be pieced together over time.

It would also motivate infrastructure to protect EA against SBFs and Delos: for example, ensuring good governance, and whistleblowing mechanisms, or asking billionaires to donate their wealth to separate entities now in advance of grants being allocated, so we know they're for real / the commitment is good. (Each of these mechanisms might not be a good idea, I don't know, I just mean that the general category probably has useful things in it.)

It would also imply 'stop valorizing them'. If we hadn't got to the point where I have a sticker by my bed reading 'What Would SBF Do?' (from EAG SF 2022*), EAs like me could hold our heads higher (I should probably remove that). Other ways to valorize billionaires include inviting them to events, podcasts, parties, working for them, and doing free PR for them. Let's think twice about that next time.

Not saying 'stop talking to Vitalik', but: the alliance with billionaires has been very cosy, and perhaps it should cool, or uneasy.

The above is strongly expressed, but I'm mainly trying this view on for size.

*produced by a random attendee rather than the EAG team

Hedge on reputation

Even if we took SBF's money at the time we didn't need to double down by connecting ourselves to his reputation. He was just a man. In this way we reinvested capital in something we were already overinvested in.

(This is similar to freedom and utility's point)

We were narrow-minded in the kinds of catastrophic risks to look at and so some high-probability risks were ignored because they weren't the right type.

I sense most that far more of happy to take on the burden of learning more about AI risk than financial risk. I've heard many people trying to upskill in AI. I've never heard someone say they wanted to learn more about FTX's finances to avoid an catastrophic meta risk

Well, obvious thought in hindsight #1: Manifold scandal prediction markets with anonymous trading and rolling expiration dates.

I don't know how else you'd aggregate a lot of possible opinions that people possibly might not be incentivized to say openly, into a useful probability estimate that anyone could actually act on.

Did people in the general EA polysphere know about the FTX polycule environment, and in particular that the CEOs of FTX and Alameda were sleeping together on a regular basis? If so, this probably should have raised a lot of people's estimates of financial misconduct. I wouldn't expect EAs to be especially savvy as to all the weird arbitrage trades in the crypto space and how they could go wrong, so missing that is very forgivable, but I would expect high-level EAs to be extremely aware of who is fucking who.

Set a higher bar for what good business practices are

By lionising someone involved in ponzi schemes and who handled money they should have known came from crime, we sent a credible signal that it was okay to break norms of morality as long as one didn't get caught.

It should not be entirely surprising they went on to commit fraud.

What if there were a norm in EA of not accepting large amounts of funding unless a third-party auditor of some sort has done a thorough review of the funder's finances and found them to above-board? Obviously lots of variables in this proposal, but I think something like this is plausibly good and would be interested to hear pushback.

I have been quietly thinking "this is crypto money and it could vanish anytime." But I never said it out loud, because I knew people like Eliezer would say the kind of thing Eliezer said in the tweet above: "you're no expert, people way deeper into this stuff than you are putting their life savings in FTX, trust the market." It's a strangely inconsistent point of view from Eliezer in particular, who's expressed that his "faith has been shaken" in the EMH.

What Eliezer's ignoring in his tweet here is that the people who were skeptical of FTX, or crypto generally, mostly just didn't invest, and thus had no particular incentive to scrutinize FTX for wrongdoing. As it turns out, the only people looking closely enough at FTX were their rivals, who may have been doing this strategically in order to exploit vulnerabilities, and thus were incentivized not to spread this information until they were ready to trigger catastrophe. If there's money in scrutinizing a company, there's no money in releasing that information until after you've profited from it.

In my opinion, we need dedicated risk management for the EA community. The express purpose of risk management would be to start with the assumption that markets are not efficient, to brainstorm all the hazards we might face, without a requirement to be rigorously quantitative, to try and prioritize them according to severity and risk, and figure out strategies to mitigate these risks. And to be rude about it.

I think this does point to a serious failure mode within EA. Deference to leadership + insistance on quantitative models + norms of collegiality + lack of formal risk assessment + altruistic focus on other people's problems -> systemic risk of being catastrophically blindsided more than once.

Let me answer prospectively:

To vet charity destinations, we have GiveWell. Individual donors don't need to do their own research; they can consult GiveWell's recommendations, which include extensive, publicly documented deep dives into those organizations that make fraud overwhelmingly unlikely.

This experience shows that we need something analogous to vet charity sources, ReceiveWell, say. Individual recipients shouldn't need to do their own research; they would consult ReceiveWell's ratings of the funders in question, which would include extensive, publicly documented deep dives into the sources and risks associated with each of them.

Make it clearer that earning to give shouldn’t involve straightforward EV maximisation because charities / NGOs benefit from certainty and stability, and you shouldn’t make decisions which have a high risk of losing money which has already been promised to charities even if the decision is positive EV.

Make it clearer that EA is not just about maximising expected value since maximising EV will sometimes involve dishonesty and illegality.

I've commented on a separate post here.

In short: I'm not sure EA could have prevented or predicted this particular event with FTX blowing up.

However, EA did know that its funding sources were very undiversified and volatile, and could have thought more about the risks of an expected source of funding drying up and how to mitigate those risks.

Have a place to store concerns about stuff like this publicly.

There were lots of people with different information. We could have put it all in the FTX forum article.

Encourage more EAs to form for-profit start-ups and aim to diversify donors - lots of multi-millionaires > 2 billionaires

There was no avoiding of this.

The only way would've been with:

1. A professional third-party audit, which requires
   1. Regulatory norms for avoiding frauds such as these.
2. Forbidding SBF from associating himself with EA.

The first option is a non-starter because there are no such crypto regulations.

I don't know about the finances of FTX, but I do know about audits. Auditors work based on norms^[1], and those norms get better at predicting new disasters by learning from previous disasters (such as Enron). The same is true of air travel, one of "the safest ways of travel".

The second option is also a non-starter because of ... ¿The First Amendment?

Therefore, we couldn't have "avoided" ... What exactly?

• ... SBF's fraud? or
• ... SBF harming the EA "brand"?

If what we want is to avoid future fraud in the Crypto community, then the goal of the Crypto community should be to replicate the air travel model for air safety^[2]:

• Strong (and voluntary) inter-institutional cooperation, and
• A post-mortem of every single disaster in order to incorporate not regulation but "best practices".

However, if the goal is to avoid harming the EA "brand", then there's a profession for that. It's called "Public Relations".

PR it's also the reason why big companies have rules that prevent them from (publicly) doing business with people suspected of doing illegal activities. ("The wife of the Caesar must not only be pure, but also be free of any suspicios of impurity")

For example, EA institutions could from now on:

• Copy GiveDirectly's approach and avoid any single donor from representing more than 50% of their income.
  • Perhaps increase or decrease that percentage, depending on the impact in SBF's supported charities.
• Reject money that comes from Tax Havens.
  • FTX was a business based mainly in The Bahamas.
  • I don't know what is the quality of the Bahamas standard for financial audits. In fact, I don't even know if they demand financial audits at all... but I know that The Bahamas is sometimes classed as a Tax Haven, and is more likely that we find criminals and frads with money in Tax Haven than outside of them.
• Incentivize their own supported charities to reject dependence on a single donor, and to reject money that comes from Tax Havens.
• Perhaps also...
  • ... Campaign against Tax Havens?
    • Tax Havens crowd out against money given to tax-deductible charities, and therefore for EA Charities.
    • There is an economic benefit to some of the citizens of the Tax Haven countries, but when weighted against the criminal conduct that they enable... are they truly more good than bad?
  • ... Create a certification for NGOs to be considered "EA"?
    • Most people know that some causes (Malaria treatments, Deworming...) are well-known EA causes.
      • They are causes that attract million of dollars in funding.
    • Since there is no certification for NGO0s to use the name "EA", a fraudster-in-waiting can just
      1. Start a new NGO tomorrow.
      2. "Brand" itself as an EA charity
      3. See the donations begin to pour-in, and
      4. Commit fraud in a new manner that avoids existing regulation
      5. Profit
      6. Give the news cycle an exciting new story, and the EA community another sleepless night.

In fact, fraud in NGO's happens all the time. One of the reasons why Against Malaria Foundation had trouble implementing their first Give Well charity is that they were too stringent on the anti corruption requirements for governments.

It's in the direct interest of the EA community to minimize the amount of fraudulent NGO's, and to minimize the amount of EA branded fraudulent NGO's.

1. ^{^}

   My guess is that the only way in which alarms would've ringed for FTX investors was by realizing that there was a "back door" where somebody could just steal all the money.

   Would a financial auditor have looked into that, the programming aspect of the business?

   I doubt it, unless specific norms were in place to look for just that.

2. ^{^}

   In fact, at the same time that we're discussing this, a tragic air travel accident happened on a Dallas Airshow. Our efforts might be more "effective" by not discussing SBF and instead discussing Airshow Security and their morality.

We could cultivate for-profit entrepreneurship in fields with clearer social benefit. I've seen arguments that people can make a bigger impact by focusing on social impact or profitability rather than trying to do both, and I think that's true on the margin for most people, but embracing crypto may have overcorrected.

A few thoughts on how to avoid this:

1. Focus on rule utilitarianism, and stop normalizing unilateral actions that have a chance to burn the commons like lying or stealing. I wouldn't go as far as freedomandutility would, but we need to be clear that lying and stealing are usually bad, and shouldn't be normal.

Speaking of that, that leads to my next suggestion:

2. We need to have a whistleblower hotline.

Specifically, we need to make sure that we catch unethical behavior early, before things get big. Here's the thing, a lot of big failures are preceded by smaller failures, as Dan Luu says.

Here's a link:

https://danluu.com/wat/

We really need to move beyond the model of EA posts being a whistleblower's main place, even in the best case scenario.

And 3. We should be much more risk-averse to actions that involve norm violations, because they have usually negative benefits. One of SBF (and partially EA's flaw) was not realizing what the space of outcomes could be.

Quoting here:

It is important to distinguish different types of risk-taking here. (1) There is the kind of risk taking that promises high payoffs but with a high chance of the bet falling to zero, without violating commonsense ethical norms, (2) Risk taking in the sense of being willing to risk it all secretly violating ethical norms to get more money. One flaw in SBF's thinking seemed to be that risk-neutral altruists should take big risks because the returns can only fall to zero. In fact, the returns can go negative - eg all the people he has stiffed, and all of the damage he has done to EA.

Yeah, the idea that everything would fall to zero only makes sense if we take a very narrow view of who was harmed. Once we include depositors, EAs and more, it turned negative value.

IF we had a failure of "this was predictable", then I'd point some of my blame at how EA hires people, and specifically our tendency to not try to hire very senior people who can do such very complicated things.

I anyway think this is a mistake we are making as a movement

I expect the best output we could reasonably hope for from any improved detection system would be relatively modest. For example: "several community members have come forward with specific allegations of past serious misbehavior by megadonor X, and so we estimate that there is a 20% chance that X's company will be revealed as (or end up committing) massive fraud in the next ten years." If someone has strongly probative evidence of fraud, that person should not be going an outfit set up by the EA community with that information . . . they should be going to the appropriate authorities.

Let's say a detection system had discerned a 20% chance of significant fraud by SBF -- this seems to at least several times better performance than the results obtained by organizations with better access to FTX's internal accounting and lots of resources/motivation. What then? Does the community turn down any FTX-related money, even though there is an 80% chance there is nothing scandalous about FTX? How does that get communicated in a decentralized community where everyone makes their own decisions about who to accept funding from?

And how is that communicated -- especially in a PR/optics fashion -- in a way that doesn't create a serious risk of slander/libel liability? "We think Megadonor X poses an unacceptable risk of causing grave reputational harm to the community" sure sounds like an opinion based on undisclosed facts, which is a potentially slanderous form of opinion even in the free-speech friendly USA.

It was widely known that crypto-linked assets are inherently volatile and can disappear in a flash, so while better intel on SBF would have better informed the odds of catastrophic funding loss it was not necessary to understand that this risk existed.

All that is to say that the better approach might be more focused on what healthcare workers would call universal precautions than on attempting to identify the higher-risk individuals. Wear gloves with all patients. Always "hedge on reputation" as Nathan put it below.