Sam Bankman-Fried gave millions to effective altruism. What happens now that the money is gone?

The crypto billionaire’s fortune vanished with the fall of the FTX exchange, and effective altruism may suffer as a result.

Former crypto billionaire Sam Bankman-Fried wasn’t just one of the major figures associated with “effective altruism,” or EA, the movement in philanthropy to rigorously hold charitable donations to external measures of effectiveness and impact. He has also exerted significant influence on the movement through his once-prodigious funding capacities.

Gambling with the future

“I think people follow individual leaders, so there was some logic in building his brand as a way of creating a public face for effective altruism for people to connect with emotionally and follow,” said Morrison, referring to MacAskill. “For reasons mostly out of his control, he is less able to do that than he was pre-FTX, though I think his association with cryptocurrency was an understandable but unnecessary risk.”

In the wake of FTX’s collapse, much attention has been paid to its sister trading firm, Alameda Research. FTX lent billions of dollars in customer assets to Alameda, run by Bankman-Friend associate Caroline Ellison; when the news emerged, FTX was brought down by a modern-day bank run. While the details of Alameda’s trading and FTX’s relationship with the firm remain to be excavated by law enforcement, auditors, lawyers and reporters, Bankman-Fried had been relatively open about how he dealt with questions of risk and reward, at least in a theoretical way.

Bankman-Fried argued that philanthropists and those earning money to give it away should be more tolerant of risk: “Your strategy is very different if you’re optimizing for making at least a million dollars, versus if you’re optimizing for just the linear amount that you make.” He said he founded FTX because “there’s well, and then there’s better than well — there’s no reason to stop at just doing well.”

“More good is more good. It’s not like you did some good, so good doesn’t matter anymore. But how about money? Are you able to donate so much that money doesn’t matter anymore? And the answer is, I don’t exactly know,” Bankman-Fried said to Wiblin.

He continued: “The expected value of how much impact you have, I think, is going to be a function sort of weighted towards upside tail cases. That’s what I think my prior would be. And if your impact is weighted towards upside tail cases, then what’s that probability distribution of impact probably look like? I think the odds are, it has decent weight on zero. Maybe majority weight.”

In other words, the expected benefits from Alameda and FTX amassing capital and making money were so high that it was OK — maybe even ethically mandated — to accept the risk of losing everything.

“If you see yourself as fighting against this risk of humanity and you see humanity as [lasting] the next trillion years, it’s easy to have a god complex and lose humility as a virtue,” Morrison said.

Double or nothing?

If the universe of worthwhile projects for others is greater than the amount of money you can make on a bet, Ellison seems to argue, it makes sense to continually go double or nothing. The most you can lose is your net worth, while the most you can gain is the well-being of millions. Of course, in the end, Bankman-Fried and Ellison lost far more than their own net worth; there’s a gaping hole of some billions of dollars where client funds used to be in FTX.

“There’s an attempt at maximizing whatever quantity they’re interested in. That is one of the risks inherent in that philosophy, you’re hoping to max out on something. Sometimes, according to that calculation, you’re justified in taking high risk,” Carla Zoe Cremer, an Oxford scholar and EA critic, told Grid.

“The kind of questions they’re asking are about the long-term future, which we have no information for. You can tweak on those variables to the extent you can make any argument for whatever,” Cremer said.

Morrison agreed, telling Grid, “I have believed for a while that EA should be more decentralized. … There was a closeness and reliance on crypto combined with a lack of effective governance. I don’t think this disaster could have been avoided, but it probably could have been mitigated with a more decentralized community.”

Alex Wilson, co-founder of the Giving Block, a company that helps nonprofits and others accept donations in Bitcoin and other cryptocurrencies, downplayed the fallout from the downfall of FTX. He noted that crypto philanthropy, with or without SBF and FTX, continues to grow rapidly.

“I would say their influence on the space was actually relatively small, and I don’t think that it really changes anything when it comes to the broader movement of crypto philanthropy,” he said.

But he is worried that regulators will respond by enacting policies that stifle the industry but don’t solve its problems. “Often when you have these kinds of things happen, overly aggressive things get passed that wouldn’t actually address the underlying issue here — this was a failure of [one] person and entity,” said Wilson.

Filling the gaps

Cremer put Bankman-Fried on one side of the EA community, one that’s more comfortable with outlandish hypotheticals about existential risk, one that’s more willing to “bite the bullet” on what their philosophy implies than others. “Someone like Sam is a bit of an archetype for me,” Cremer said.

But as the movement’s leading intellectuals continued to think about the opportunity to do the greatest good, another goal stood out: preventing human extinction. This would potentially benefit trillions of people whose lives could be snuffed out by nuclear warfare, a devastating pandemic or runaway artificial superintelligence.

It’s the latter that ultimately captured the attention of Bankman-Fried and his wallet. (Moskovitz condemned Bankman-Freed in a Twitter thread, describing FTX’s collapse as “infuriating, devastating, and incredibly humbling all at once” while committing to try to “repair the damage Sam did and harden EA against other bad actors … because the stakes remain painfully high.”)

Bankman-Fried’s Future Fund has a dizzying array of grants, but some of the largest go to other EA organizations to support the broader EA community. There was almost $7 million worth of grants for coworking spaces in London and Berkeley, almost $14 million for the Centre for Effective Altruism (which MacAskill helped found), $900,000 “to support prizes for outstanding writing which encourages a broader public conversation around effective altruism and longtermism,” $15 million to Longview and the Long-Term Future Fund, both of which former FTX Foundation president Nick Beckstead advises.

“The funding environment for EA in general over the next couple years isn’t great (FTX aside) insofar as Facebook stock is down, tech stocks seem likely to go down and there may be a recession,” Morrison said. “So there’s probably whiplash from a lot of people making career decisions based on seemingly reasonable financial expectations that have now been upset.”

But many hope the work will continue. “I think there is going to be (and should be) a buckling down on just doing useful s--- and talking less about what ‘effective altruism’ means,” said Morrison. “Which I think will be a healthy thing.”

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