Sam Bankman-Fried’s reckless, fraudulent behavior took down more than just his empire. He also mortified the millions of customers and businesses who trusted him and tarnished the reputation of a philanthropic movement: effective altruism.
Bankman-Fried was a big advocate for effective altruism — commonly referred to as EA. He set up Future Fund under the FTX Foundation, bankrolled by himself and other FTX executives, which promised millions of dollars in donations to nonprofit organizations.
But now, after recent bankruptcy filings, those promises have fallen by the wayside.
FTX Future Fund’s entire team resigned last week; in an open letter posted on an EA forum, the team wrote, “We are now unable to perform our work or process grants, and we have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.”
What is effective altruism?
Effective altruism is a philosophical and social movement, formalized at Oxford University. It describes itself as a scientific method that uses “evidence and reason in search of the best ways of doing good.”
Fundamentally, the movement chooses to tackle global issues through finding “the best ways of helping others, and putting them into practice.” It defines itself as an “intellectual project,” designed to “build a radically better world.”
The movement encourages its participants to lean into careers which can tackle “pressing problems” or use their skill set to “contribute to these problems” and “[donate] to carefully chosen charities.”
Bankman-Fried, the failed altruist
Future Fund’s website described the fallen crypto personality as an individual who “set out to make as much money as he could, in order to give away everything he earned to charity.”
Prominent venture capital firm Sequoia Capital once wrote a glowing review of the former billionaire.
In the article titled “Sam Bankman-Fried Has a Savior Complex and Maybe You Should Too,” the writers described the 30-year-old as “the eldest son of two Stanford law professors” who grew up in an “utilitarian” family that used logical arguments to understand world problems.
It describes how Bankman-Fried first came across EA in his fraternity Epsilon Theta, where he met William MacAskill, who is now an associate professor of philosophy at Oxford and one of the originators of EA.
“As a junior, [Bankman-Fried] was wondering what to do with his life. And MacAskill — [Peter] Singer’s philosophical heir — had the answer: The best way for him to maximize good in the world would be to maximize his wealth,” the article wrote.
“SBF’s purpose in life was set: He was going to get filthy rich, for charity’s sake. All the rest was merely execution risk.”
FTX’s website claims that the company donated over $190 million to charities. The platform encouraged user donations and said it would match donations to up to $10,000 daily. It also noted that 1% of all FTX’s net fees would be donated through FTX Philanthropy Inc.
Despite these outwardly philanthropic efforts, Bankman-Fried was also busy spending money on arena naming rights, Super Bowl commercials and donating a substantial amount to US politicians in an effort to extend his influence in Washington, DC.
Since his downfall, many have argued that Bankman-Fried hid behind the EA movement to justify his ambitions.
Dustin Moskovitz, CEO and co-founder of Asana, tweeted, “either EA encouraged Sam’s unethical behavior, or provided a convenient rationalization for such actions. Either is bad.”
Many EA participants have been appalled by Bankman-Fried’s actions.
Robert Wiblin, host of the 80,000 Hours Podcast, tweeted, “No plausible ethics permits one to lose money trading then take other people’s money to make yet more risky bets in the hope that doing so will help you make it back.”
MacAskill, once an advocate for Bankman-Fried, resigned from an unpaid adviser role at Future Fund and tweeted, “I want to make it utterly clear: if those involved deceived others and engaged in fraud (whether illegal or not) that may cost many thousands of people their savings, they entirely abandoned the principles of the effective altruism community.”
He added, “I had put my trust in Sam, and if he lied and misused customer funds he betrayed me, just as he betrayed his customers, his employees, his investors and the communities he was a part of.”
Many other community members have also echoed MacAskill’s sentiment.
“Outside observers will be looking to see what EA has to say about all of this, and I think we need to be very clear that fraud is not something that we ever support,” Evan Hubinger, a research fellow at Machine Intelligence Research Institute, wrote in a EA forum.
Bankman-Fried’s actions will have “lasting consequences,” Hubinger said, adding, “The damage caused by FTX to all of their customers and employees — will likely outweigh the altruistic funding already provided by FTX to effective causes.”
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