IMO the EA community has had a reckoning, a post-mortem, an update, etc. far more than most social or political movements would (and do) in response to similar misbehavior from a prominent member
As a reference point: fraud seems fairly common in ycombinator backed companies, but I can’t find any sort of postmortem, even about major things like uBiome where the founders are literally fugitives from the FBI.
It seems like you could tell a fairly compelling story that YC pushing founders to pursue risky strategies and flout rules is upstream of this level of fraudulent behavior, though I haven’t investigated closely.
My guess is that they just kind of accept that their advice to founders is just going to backfire 1-2% of the time.
I would be ecstatic to learn that only 2% of Y-Combinator companies that ever hit $100mm were engaged in serious fraud, and presume the true number is far higher.
And yes, YC does do that and Matt Levine frequently talks about the optimal amount of fraud (from the perspective of a VC) being not zero. For them, this is a feature, not a bug, up to a (very high) point.
I would hope we would feel differently, and also EA/rationality has had (checks notes) zero companies/people bigger than FTX/SBF unless you count any of Anthropic, OpenAI and DeepMind. In which case, well, other issues, and perhaps other types of fraud.
The total net-fraud from YC companies seems substantially smaller than the total net-fraud from EA efforts, and I think a lot more people have been involved with YC than EAs, so I don’t really think this comparison goes through.
Like EA has defrauded much more money than we’ve ever donated or built in terms of successful companies. Total non-fradulent valuations of YC companies are in the hundreds of billions, whereas total fraud is is maybe in the $1B range? That seems like a much more acceptable ratio of fraud to value produced.
Also, I don’t think it makes sense to characterize FTX’s theft of customer funds as “EA defrauding people”. SBF spent around $100 million on charitable causes and billions on VC investments, celebrity promotions, interest payments to crypto lenders, bahamas real estate, and a bunch of other random crap. And Alameda lost a bunch more buying shitcoins that crashed.
To say that EA defrauded people because FTX lost money is to say that of the 8 billion or whatever Alameda was short, the $100 million spent on EA priorities is somehow responsible for the other 7.9 billion. It just doesn’t make any sense.
I think it makes sense to say “EAs defrauded people”. Sam was clearly an EA, and he mostly defrauded people in pursuit of an EA mission, which he thought was best optimized by increasing the valuation of FTX.
Virtually no one in EA would have approved of the manner by which Sam sought to make FTX more valuable. So I guess I don’t really see it as a failure of the EA movement or its morals. If someone is part of a movement and does something that the movement is explicitly against, is it the movements fault?
I also don’t think people put their money in FTX because they wanted to help EA. They mostly put money in FTX because they believed it was a reputable exchange (whether that was because it was endorsed by Tom Brady or Steph Curry or any number of other people) and because they wanted to make money on Crypto.
Virtually no one in EA would have approved of the manner by which Sam sought to make FTX more valuable.
I talked to many people about Sam doing shady things before FTX collapsed. Many people definitely endorsed those things. I don’t think they endorsed stealing customer deposits, though honestly, my guess is a good chunk of people would have endorsed it if that wouldn’t have resulted in everything exploding (and if it was just like a temporary dip into customer deposits).
I don’t understand the second paragraph. Yes, Sam tricked people into depositing money onto his exchange, which he then used to fund a bunch of schemes, mostly motivated via EA and with the leadership team being substantially populated by EA people. Of course the customers didn’t want to help EA, that’s what made it a fraud. My guess is I am misunderstanding something you are trying to communicate.
Well, it’s more “you steal 8 billion dollars and gamble them on all-or-nothing bets where if you win you are planning to spend them on EA”. I think that totally counts as EA.
Like, Sam spent that money in the hopes of growing FTX, and the was building FTX for earning to give reasons.
That is an interesting number, however I think it’s a bit unclear how to think about defrauding here. If you steal $1000 dollars, and then I sue you and get that money back, it’s not like you “stole zero dollars”.
I agree it matters how much is recoverable, but most of the damage from FTX is not about the lost deposits specifically anyways, and I think the correct order of magnitude of the real costs here is probably greater than the money that was defrauded, though I think reasonable people can disagree on the number here. Similarly I think when you steal a $1000 bike from me, even if I get it back, the economic damage that you introduced is probably roughly on the order of the cost of the bike.
I also don’t believe the $1.8B number. I’ve been following the reports around this very closely and every few weeks some news article claims vastly different fractions of funds have been recovered. While not a perfect estimator, I’ve been using the price at which FTX bankruptcy claims are trading at, which I think is currently at around 60%, suggesting more like $4B missing (claims of Alameda Research are trading at 15%, driving that number down further, but I don’t know what fraction of the liabilities were Alameda claims).
Yep that’s fair, there is some subjectivity here. I was hoping that the charges from SDNY would have a specific amount that Sam was alleged to have defrauded, but they don’t seem to.
Regarding $4B missing: adding in Anthropic gets another $4B on the EA side of the ledger, and founders pledge another $1B. The value produced by Anthropic is questionable, and maybe negative of course, but I think by the strict definition of “donated or built in terms of successful companies” EA comes out ahead.
(And OpenAI gets another $80B, so if you count that then I think even the most aggressive definition of how much FTX defrauded is smaller. But obviously OAI’s EA credentials are dubious.)
Regarding $4B missing: adding in Anthropic gets another $4B on the EA side of the ledger, and founders pledge another $1B.
Well, I mean, I think making money off of building doomsday machines goes on the cost side of the ledger, but I do think it applies to the specific point I made above and I think that’s fair. Anthropic is quite successful at a scale that is not that incomparable to the size of the FTX fraud.
As a reference point: fraud seems fairly common in ycombinator backed companies, but I can’t find any sort of postmortem, even about major things like uBiome where the founders are literally fugitives from the FBI.
It seems like you could tell a fairly compelling story that YC pushing founders to pursue risky strategies and flout rules is upstream of this level of fraudulent behavior, though I haven’t investigated closely.
My guess is that they just kind of accept that their advice to founders is just going to backfire 1-2% of the time.
I would be ecstatic to learn that only 2% of Y-Combinator companies that ever hit $100mm were engaged in serious fraud, and presume the true number is far higher.
And yes, YC does do that and Matt Levine frequently talks about the optimal amount of fraud (from the perspective of a VC) being not zero. For them, this is a feature, not a bug, up to a (very high) point.
I would hope we would feel differently, and also EA/rationality has had (checks notes) zero companies/people bigger than FTX/SBF unless you count any of Anthropic, OpenAI and DeepMind. In which case, well, other issues, and perhaps other types of fraud.
Oh yeah, just because it’s a reference point that doesn’t mean that we should copy them
The total net-fraud from YC companies seems substantially smaller than the total net-fraud from EA efforts, and I think a lot more people have been involved with YC than EAs, so I don’t really think this comparison goes through.
Like EA has defrauded much more money than we’ve ever donated or built in terms of successful companies. Total non-fradulent valuations of YC companies are in the hundreds of billions, whereas total fraud is is maybe in the $1B range? That seems like a much more acceptable ratio of fraud to value produced.
FTX is missing $1.8B. OpenPhil has donated $2.8B.
Also, I don’t think it makes sense to characterize FTX’s theft of customer funds as “EA defrauding people”. SBF spent around $100 million on charitable causes and billions on VC investments, celebrity promotions, interest payments to crypto lenders, bahamas real estate, and a bunch of other random crap. And Alameda lost a bunch more buying shitcoins that crashed.
To say that EA defrauded people because FTX lost money is to say that of the 8 billion or whatever Alameda was short, the $100 million spent on EA priorities is somehow responsible for the other 7.9 billion. It just doesn’t make any sense.
I think it makes sense to say “EAs defrauded people”. Sam was clearly an EA, and he mostly defrauded people in pursuit of an EA mission, which he thought was best optimized by increasing the valuation of FTX.
Virtually no one in EA would have approved of the manner by which Sam sought to make FTX more valuable. So I guess I don’t really see it as a failure of the EA movement or its morals. If someone is part of a movement and does something that the movement is explicitly against, is it the movements fault?
I also don’t think people put their money in FTX because they wanted to help EA. They mostly put money in FTX because they believed it was a reputable exchange (whether that was because it was endorsed by Tom Brady or Steph Curry or any number of other people) and because they wanted to make money on Crypto.
I talked to many people about Sam doing shady things before FTX collapsed. Many people definitely endorsed those things. I don’t think they endorsed stealing customer deposits, though honestly, my guess is a good chunk of people would have endorsed it if that wouldn’t have resulted in everything exploding (and if it was just like a temporary dip into customer deposits).
I don’t understand the second paragraph. Yes, Sam tricked people into depositing money onto his exchange, which he then used to fund a bunch of schemes, mostly motivated via EA and with the leadership team being substantially populated by EA people. Of course the customers didn’t want to help EA, that’s what made it a fraud. My guess is I am misunderstanding something you are trying to communicate.
A simpler way to phrase my question is “If you steal 8 billion and spend 7.9 billion on non-EA things, did you really do it for EA?”
Well, it’s more “you steal 8 billion dollars and gamble them on all-or-nothing bets where if you win you are planning to spend them on EA”. I think that totally counts as EA.
Like, Sam spent that money in the hopes of growing FTX, and the was building FTX for earning to give reasons.
That is an interesting number, however I think it’s a bit unclear how to think about defrauding here. If you steal $1000 dollars, and then I sue you and get that money back, it’s not like you “stole zero dollars”.
I agree it matters how much is recoverable, but most of the damage from FTX is not about the lost deposits specifically anyways, and I think the correct order of magnitude of the real costs here is probably greater than the money that was defrauded, though I think reasonable people can disagree on the number here. Similarly I think when you steal a $1000 bike from me, even if I get it back, the economic damage that you introduced is probably roughly on the order of the cost of the bike.
I also don’t believe the $1.8B number. I’ve been following the reports around this very closely and every few weeks some news article claims vastly different fractions of funds have been recovered. While not a perfect estimator, I’ve been using the price at which FTX bankruptcy claims are trading at, which I think is currently at around 60%, suggesting more like $4B missing (claims of Alameda Research are trading at 15%, driving that number down further, but I don’t know what fraction of the liabilities were Alameda claims).
Yep that’s fair, there is some subjectivity here. I was hoping that the charges from SDNY would have a specific amount that Sam was alleged to have defrauded, but they don’t seem to.
Regarding $4B missing: adding in Anthropic gets another $4B on the EA side of the ledger, and founders pledge another $1B. The value produced by Anthropic is questionable, and maybe negative of course, but I think by the strict definition of “donated or built in terms of successful companies” EA comes out ahead.
(And OpenAI gets another $80B, so if you count that then I think even the most aggressive definition of how much FTX defrauded is smaller. But obviously OAI’s EA credentials are dubious.)
Well, I mean, I think making money off of building doomsday machines goes on the cost side of the ledger, but I do think it applies to the specific point I made above and I think that’s fair. Anthropic is quite successful at a scale that is not that incomparable to the size of the FTX fraud.
We have Wildeford’s Third Law: “Most >10 year forecasts are technically also AI forecasts”.
We need a law like “Most statements about the value of EA are technically also AI forecasts”.