I'm the person that Kerry was quoting here, and am at least one of the reasons he believed the others had signed agreements with non-disparagement clauses. I didn't sign a severance agreement for a few reasons: I wanted to retain the ability to sue, I believed there was a non-disparagement clause, and I didn't want to sign away rights to the ownership stake that I had been verbally told I would receive. Given that I didn't actually sign it, I could believe that the non-disparagement clauses were removed and I didn't know about it, and people have just been quiet for other reasons (of which there are certainly plenty).

I think point 3 is overstated but not fundamentally inaccurate. My understanding was that a group of senior leadership offered Sam to buy him out, he declined, and he bought them out instead. My further understanding is that his negotiating position was far stronger than it should have been due to him having sole legal ownership (which I was told he obtained in a way I think it is more than fair to describe as backstabbing). I wasn't personally involved in those negotiations, in part because I clashed with Sam probably worse than anyone else at the company, which likely would have derailed them.

That brings me to my next point, which is that I definitely had one of the most negative opinions of Sam and his actions at the time, and it's reasonable for people to downweight my take on all of this accordingly. That said, I do feel that my perspective has been clearly vindicated by current events.

I want to push back very strongly against the idea that this was primarily about Sam's appetite for risk. Yes, he has an absurd appetite for risk, but what's more important is what kinds of risks he has an appetite for. He consistently displayed a flagrant disregard for legal structures and safeguards, a belief that rules do not apply to him, and an inclination to see the ends as justifying the means. At this stage it's clear that what happened at FTX was fraud, plain and simple, and his decision to engage in that fraud was entirely in character.

(As a minor note, I can confirm that the "wireless mouse" phrase does validate ftxthrowaway as someone who was there at the time, though of course now that it has been used this way publicly once it will no longer be valid in the future.)

I think it is very important to understand what was known about SBF's behaviour during the initial Alameda breakup, and for this to be publicly discussed and to understand if any of this disaster was predictable beforehand. I have recently spoken to someone involved who told me that SBF was not just cavalier, but unethical and violated commonsense ethical norms. We really need to understand whether this was known beforehand, and if so learn some very hard lessons. 

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. 

Huh, I am surprised that no one responded to you on this. I wonder whether I was part of that conversation, and if so, I would be interested in digging into what went wrong. 

I definitely would have put Sam into the "un-lawful oathbreaker" category and have warned many people I have been working with that Sam has a reputation for dishonesty and that we should limit our engagement with him (and more broadly I have been complaining about an erosion of honesty norms among EA leadership to many of the current leadership, in which I often brought up Sam as one of the sources of my concern directly). 

I definitely had many conversations with people in "EA leadership" (which is not an amazingly well-defined category) where people told me that I should not trust him. To be clear, nobody I talked to expected wide-scale fraud, and I don't think this included literally everyone, but almost everyone I talked to told me that I should assume that Sam lies substantially more than population-level baseline (while also being substantially more strategic about his lying  than almost everyone else).

I do want to add to this that in addition to Sam having a reputation for dishonesty, he also had a reputation for being vindictive, and almost everyone who told me about their concerns about Sam did so while seeming quite visibly afraid of retribution from Sam if they were to be identified as the source of the reputation, and I was never given details without also being asked for confidentiality. 

I found this comment annoying enough to read that I felt compelled to give a simplified version:

In 2021, I asked about SBF among some "senior EA people". I had heard that Alameda had had a hard breakup, and I didn't know whether SBF cheated his partners or whether he was merely a punctilious negotiator who nonetheless keeps his word. Based on what I heard, I classified SBF more as a punctilious negotiator than as a cheater, and I definitely didn't hear about them having poor capital controls at the beginning. 

My own guess is that you are mischaracterizing what EA leadership knew.

This removes some nuance, but maybe adds some clarity.

Edit: Reworded, see original here.

I consider this credible.

It suggests that my categorization of "EA leadership" was probably too broad and that fewer people knew the details of the situation than I believed.

That means there is a question of how many people knew. I am confident that Nick Beckstead and Will MacAskill knew about the broken agreement and other problems at Alameda. I am confident they are not the only ones that knew.

Same here, this is really helping me understand the (at least perceived) narrative flow of events

Agree with much of what you say here. (Though I don't think we currently have strong enough evidence to single out specific EA leaders as being especially responsible for the recent tragic events; at least I don't think I personally have that kind of information.)

As a substitute, or complement, to an investigative EA newspaper, what do you think about an "EA rumours" prediction market?^[1] Some attractive features of such a market:

• It turns private information held by individual people with privileged access to sources into public information available to the entire EA community, increasing the likelihood that the information will reach those for whom it is most valuable and actionable.
• It potentially reduces community drama by turning "hot" debates influenced by tribal allegiances and virtue signaling into "cold" assignments of probability and assessments of evidence.
• It makes rumours more accurate, by incentivizing users to estimate their probability correctly.
• It makes false rumours less damaging to their targets, by explicitly associating them with a low probability.

I think this market would need judicious moderation to function well and avoid being abused. But overall it seems to me like it might be an idea worth exploring further, and of the sort that could make future events in the same reference class as the FTX debacle less likely to happen.

1. ^{^}

   By 'market', I do not necessarily mean a real-money prediction market like Polymarket or PredictIt; it could also be a play-money market like Manifold Markets or a forecasting platform like Metaculus.

To the extent that Kerry's allegation involves his own judgment of Sam's actions as bad or shady, I think it matters that there's reason not to trust Kerry's judgment or possibly motives in sharing the information. However we should definitely try to find out what actually happened and determine whether it was truly predictive of worse behavior down the line.

Agreed! IMO it's good for people to be aware that Kerry has an axe to grind; but the thing to do with that information is to look into the matter further.

I retract this comment. Kerry has continued repeating the same claim on Twitter without noting that there's disagreement about its truth. This does not seem like unbiased behavior.

Hard disagree on Leverage. They've absorbed a tonne of philanthropic funding over the years to produce nothing but pseudoscience and multiple allegations of emotional abuse.

I'm not saying Kerry wouldn't know about this stuff - I think he likely does. I'm saying a) that he was one of the 'top leaders' he refers to, so had ample chance to do something about this himself, b) he has a track record of questionable integrity, and c) he has potential motive to undermine the people he's criticising.

I'm not a fan of Leverage, but I agree with Richard here. I think Kerry is better modeled as "normal philosophy-friendly EA" with the modifications "less conflict-averse than the average EA" and "mad at EA (for plenty of good reasons and also plenty of bad reasons, IMO) and therefore pretty axe-grindy". If you model him with a schema closer to "crazy cultist" than to "bitter ex-EA", I expect you to make worse predictions.

I’m guessing I have a lower opinion of Leverage than you based on your tone, but +1 on Kerry being at CEA for 4 years making it more important to pay serious attention to what he has to say even if it ultimately doesn’t check out. We need to be very careful to minimize tribalism hurting our epistemics.

Regarding 'top EA leaders' knowing about it (see further in the thread).

I’d also recommend reading Zoe Curzi’s essay about her own (traumatic) experience at Leverage, the publishing of which was publicly supported by Leverage founder Geoff Anders.

Wow, I didn't see it at the time but this was really well written and documented. I'm sorry it got downvoted so much and think that reflects quite poorly on Forum voting norms and epistemics.

I think that what FTX is accused of this comment is legitimately way more something where a charitable recipient is not morally obliged to demand this level of careful checking of everything, because our civilization is just not actually able to support this level of competency pornography.

Stealing your customers' funds is a very different matter from "some of the people who use our services are criminals".  Why, MIRI has in the past accepted matching funds from Google, which I'm sure profits a whole lot off criminals using their services!  And some of those criminals may even be bad people!

But you can't, actually, run a post-agricultural civilization on the principle of everybody who engages in every transaction checking out the full moral character of everybody who transacts with them.  If you did try to build clever infrastructure for that, its first use on the margin would be by the right to hunt down sex workers (as already occurs with Visa) and by the left to hunt down people who said bad things on Twitter.

In a hunter-gatherer tribe it maybe makes sense to demand that people not transact with that bad guy over there; it scales as far as it needs to scale.  And MIRI would not take money from somebody what we knew had stolen in charity's name.  But to figure it all out - if you want to read about Civilizations that have the basic infrastructure and competence to run those kind of traces, go read science fiction; here on Earth you've got VC firms trying to run six months of due diligence and then they invest in FTX.

Quoting from the article you linked about the involvement of Daniel Friedberg, FTX's Chief Regulatory Officer, in a previous scandal:

In 2008, online poker site Ultimate Bet (UB) publicly confirmed rumors that certain individuals had utilized a little-known feature of the site’s software to view players’ hole cards during hands. This so-called ‘god mode’ allowed a number of ‘super users’ to cheat opponents out of tens of millions in poker winnings. The site’s operators begrudgingly paid out a few million to the loudest complainers and folded the site’s operations into a sister site (which was dealing with its own scandals).

In 2013, an audio recording surfaced that made mincemeat of UB’s original version of events. The recording of an early 2008 meeting with the principal cheater (Russ Hamilton) features Daniel S. Friedberg actively conspiring with the other principals in attendance to (a) publicly obfuscate the source of the cheating, (b) minimize the amount of restitution made to players, and (c) force shareholders to shoulder most of the bill.

On the tape, Daniel S. Friedberg tells Hamilton that he doesn’t want news of the cheating scandal to get out, but if it must, the “ideal thing” would be for the public to be told that a “former consultant to the company, uh, took advantage of a server flaw by hacking into the [software] client.” Friedberg advises Hamilton to publicly claim that he was among the victims of this cheating, “otherwise [the cover story’s] not going to fly.”

Regarding how many millions the site would have to cough up—both in returns to players and regulatory penalties—Friedberg says “if we could get it down to five, I’d be happy.” This is despite Friedberg knowing the real sum owed was many multiples of that number. Friedberg later says that achieving this $5 million target is possible, “depending how creative we get.”

Friedberg also emphasizes the need to shift responsibility for the payout to Excapsa, the holding company that owned UB’s software during the period in which some of the cheating took place. Friedberg discusses naming an Excapsa employee as having prior knowledge of the cheating, because “in order to get to Excapsa’s money legally you almost have to show fraud.”

Sorry this text got heavily downvoted? If so, we should be ashamed.

I don't follow crypto, or it's space, but this seems like a bad habit or norm to downvote pieces that criticize EA's questionable relationship to crypto.

Cryptocurrency doesn't actually work, and only is there for scams and fraud. Not surprising that FTX collapsed.

Most of that isn't even clearly bad, and I find it hard to see good faith here. 

Your criticism of Binance amounts to "it's cryptocurrency". Everyone knows crypto can be used to facilitate money laundering; this was, for Bitcoin, basically the whole point. Similarly the criticism of Ponzi schemes; there were literally dozens of ICOs for things that were overtly labeled as Ponzis - Ponzicoin was one of the more successful ones, because it had a good name. Many people walked into this with eyes open; many others didn't, but they were warned, they just didn't heed the warnings. Should we also refuse to take money from anyone who bets against r/wallstreetbets and Robinhood? Casinos? Anyone who runs a platform for sports bets? Prediction markets? Your logic would condemn them all.

It's not clear why FTX would want to spend this amount of money on buying a fraudulent firm.

FTX  would prefer that the crypto sector stay healthy, and backstopping companies whose schemes were failing serves that goal. That is an entirely sufficient explanation and one with no clear ethical issues or moral hazard.

Even in retrospect, I think this was bad criticism and it was correct to downvote it.

Thanks (link to the comment). I think those entries really should've been put on the EA Forum as posts to be interacted with (like with the Future Fund AI Worldview Prize^[1])

1. ^{^}

   Which I imagine is no longer happening :(

this flow chart of shells nested in shells, like Russian dolls, speaks to why the company's governance should have been a red-flag.

I don't think a highly branched company structure is a red flag: my understanding is that to operate a financial business legally across many jurisdictions you generally need to have subsidiaries in each jurisdiction. Ex: https://wise.com/help/articles/2974131/what-are-the-wise-group-entities

I think the class of issues that would make it inappropriate to accept donations is much narrower than the issues that would and should make a public investor (like a province pension fund) decline to invest.

Few private businesses are going to let an outsider come in on a regular basis, conduct a hard look at sensitive internal documents, and potentially publish derogatory information to the public. Even for investors, this kind of stuff is generally done under a heavy NDA and for good reason. That would make it extremely difficult to do this on a regular basis -- so any scrutiny would at best catch fraud that existed at the time of scrutiny.

This just isn't plausible on reasonable priors. You need to assume that multiple investment firms working in different sectors, whose survival in a highly competitive environment in large part depends on being skilled at scrutinizing a company's financials, would miss warning signs that should have been apparent to folks with no relevant domain expertise. See also Eliezer's Twitter thread.

ETA: Alexander:

Some people are asking whether people who accepted FTX money should have “seen the red flags” or “done more due diligence”. Sometimes this is from outsider critics of effective altruism. More often it’s been effective altruists themselves, obsessively beating themselves up over dumb things like “I met an FTX employee once and he seemed to be frowning, why didn’t I realize that this meant they were all committing fraud?!” Listen: there’s a word for the activity of figuring out which financial entities are better or worse at their business than everyone else thinks, maximizing your exposure to the good ones, and minimizing your exposure to the bad ones. That word is “finance”. If you think you’re better at it than all the VCs, billionaires, and traders who trusted FTX - and better than all the competitors and hostile media outlets who tried to attack FTX on unrelated things while missing the actual disaster lurking below the surface - then please start a company, make $10 billion, and donate it to the victims of the last group of EAs who thought they were better at finance than everyone else in the world. Otherwise, please chill.

And that's what Sequoia proudly publicly posted themselves

https://forum.effectivealtruism.org/posts/BesfLENShzSMeb7Xi/community-support-given-ftx-situation?commentId=y7hEdxGhjsYzpg6p3 OpenPhilantropy expects to put out an explainer about clawbacks tomorrow

The comment below that this is like Bernie Madoff is not right as far as I can see. This is a different situation, with different facts - including that we have, as yet, no idea what those facts are! Your situation will also be individual - if you took the funds as a limited company is different to if you took them individually, for example, with different effects most likely. It is also entirely unknown what is happening. Nothing has been made clear officially, no one knows what's going on and you - importantly - had nothing to do with any of that stuff that is being potentially alleged (not yet actually alleged by any authority).

I'm not giving legal advice here. I'm just stating that being calm is the right response and that googling Bernie Madoff (as suggested below), won't most likely be of any help.

I think this (the fact that there is no endowment) was (or at least should have been) pretty well-known in the EA community from the point in time that the FTX Future Fund started to pay grants, as these came from all kinds of sources, but not from an endowed foundation.  And it obviously would have been known to the people working for FTX Foundation from when they started working there.

(And I would guess one reason that it didn't raise more alarm bells for lots of people in the EA community that learned about this, is probably that they put high trust in the people working for FTX Foundation.)

Made this into a post: Why didn't the FTX Foundation secure its bag?

Why? Coin Desk's leak - which set off the death spiral - is clear enough. Multiple investors that SBF tried to get bail-out funds from have told the WSJ and FT that SBF admitted to loaning out customer funds to Alameda. Binance pulled out of the deal for a reason. There is plenty of data online about FTX's movements on the blockchain. And, of course, there's the obvious fact that SBF is now very publicly looking for $8bn of funding to cover FTX's liabilities. 

Feels like you are implying you have secret info, but it just seems extremely unlikely to me that this was anything other than huge mismanagement of customer funds against their wishes.

What odds are you willing to bet that we will see it differently in 72 hours?

That's reasonable. I guess from my perspective, I think the top EA grantmakers need persuading that p(doom|AGI) is significantly greater than 35%. If OpenPhil already think this, then that's great, but if they don't (and their probabilites are similar to the Future Fund's), then the Worldview prize is very important. Even if your probabilities are the same, or much lower, it's still very high Value of Information imo.

One could also argue for prioritizing funding for work that has already been done over work that has been approved but not yet done. If someone was going to receive a grant to do certain work and has it been pulled, that is unfair and a loss to them . . . but it's not  as bad (or as damaging to the community / future incentives) as denying people payment for work they have already done. 

How this logic translates to a prize program is murky. But unless you believe that the prize's existence did not cause people to work more (i.e., that the prize program was completely ineffective), its cancellation would mean people are not going to be paid for work already performed.

Of course, it might be possible to honor the commitment made for that work in some fashion that doesn't involve awarding full prizes. 

This sounds like a human form of alignment failure, specifically, the What Failure Looks Like story part I.

Here's a link to it:

https://www.lesswrong.com/posts/HBxe6wdjxK239zajf/what-failure-looks-like