SBF’s close affiliation with William MacAskill and the Effective Altruism movement cast a dark shadow over the legitimacy of Effective Altruism and its leaders.
Sam Bankman-Fried, commonly referred to as “SBF,” has quickly gone from a celebrated cryptocurrency billionaire and CEO of FTX, a major cryptocurrency exchange platform, to the latest major financial villain in American history. Of course, Bankman-Fried deserves due process and his day in court just like anyone else, but the more we learn about this story, the more likely it seems that Bankman-Fried deceived his customers, business partners, and some influential people in academia and the public policy world.
Bankman-Fried, who founded FTX in 2019, had a reported wealth of $26 billion in March of 2022. At its height, FTX was the third largest cryptocurrency exchange with over one million users. Notably, Bankman-Fried incorporated FTX in Antigua and Barbuda and headquartered the company in The Bahamas. One does not need to be a tax lawyer to understand that establishing FTX outside of the United States comes with obvious tax advantages and avoids regulation. The saga of Bankman-Fried is complicated and still unfolding, but what is important to know is that FTX allegedly had an extremely problematic relationship with Bankman-Fried’s other venture, Alameda Research. It appears there were borrowing and lending schemes between the two entities, which may have used the funds of FTX customers.
While the story is centered around cryptocurrency, it is just as much a story about philanthropy. Bankman-Fried has been a central figure, and arguably the poster child, for the philanthropic movement known as “Effective Altruism.”
Effective Altruism, or “EA,” has roots with influential philosophers including Peter Singer and William MacAskill. Adherents within the movement often focus on saving as many lives as possible regardless of the location of the individuals most in need. It also has a strong focus on animal welfare and on the “longtermism” objective to reduce existential threats to humanity.
So, for example, someone inspired by the EA movement would likely give her philanthropic dollars to a global nonprofit that combats the spread of malaria, as opposed to supporting a local homeless shelter in her hometown. There is nothing wrong with supporting nonprofits that combat malaria or give resources and hope to those most in need around the world. What is strange about EA is that it claims a moral imperative to support the global nonprofit, rather than the small local organization.
EA has grown into a movement that now tells all of us that we should give exclusively to global nonprofits that they—i.e., the EA “experts” and their own bureaucratic nonprofits—deem worthy. They claim a moral imperative to watch the homeless near us starve in the streets because our money can simply go further spent somewhere else.
SBF AND EA
What makes Bankman-Fried’s downfall more than just a black eye for EA is his very real connection to the EA movement, particularly with William MacAskill. MacAskill is a Scottish philosopher at the University of Oxford. He co-founded Giving What We Can, an EA-associated organization that asks its members, many of them middle income earners, to give 10% of their income to charities that he and people like him judge to be effective. MacAskill has published numerous writings on philanthropy and frequently talks about EA in public settings.
Just three months ago, The New Yorker published an article describing MacAskill’s long history with Bankman-Fried. In 2012, MacAskill was giving a talk at M.I.T., where he heard of a promising undergraduate student named Sam Bankman-Fried. MacAskill invited Bankman-Fried to lunch and told him about his philosophy of giving and EA. The next year, Bankman-Fried invited MacAskill to stay at his coed frat. Bankman-Fried graduated with a degree in physics in 2014, worked for Jane Street Capital for a period of time while staying involved in EA circles, and then briefly worked at the Centre for Effective Altruism, a UK-based nonprofit co-founded by MacAskill that describes itself as a charity dedicated to building and nurturing a global community of people who are thinking carefully about the world’s biggest problems and taking impactful action to solve them.
After leaving the Centre for Effective Altruism and founding FTX and Alameda, Bankman-Fried also founded the FTX Future Fund, which claims to make grants to nonprofits and individuals, and investments in socially impactful companies. The language used by the foundation is full of textbook EA talking points. MacAskill served on the board of the FTX Future Fund until he just recently resigned after news broke of impropriety at FTX. According to a recent Forbes article, the FTX Future Fund has given $30 million in grants to organizations that are part of “Effective Ventures,” another U.K.-based charitable entity chaired by MacAskill.
AN EMBARRASSING LOOK FOR EA
So, what does the downfall of Sam Bankman-Fried mean for the Effective Altruism movement?
Perhaps most damaging is the reputational harm done to William MacAskill, who is the intellectual heavyweight and representative of EA. Clearly, MacAskill has spent considerable time with Bankman-Fried. The two have known each other for a decade and have officially worked for each other’s organizations as employees or in board leadership positions. And, as noted above, Bankman-Fried was until very recently funneling money to operations chaired by MacAskill.
And yet MacAskill—for all of his teaching us how to give money “well”—has been in close cooperation with an ostensibly dishonest business and charitable endeavor.
This story is just beginning to unravel, but it should encourage all people to question the philosophical framework of EA—and certainly to question the integrity and effectiveness of EA leaders. MacAskill claims to be an ethicist concerned with the most disadvantaged in the world, and so it seems peculiar that he was inextricably linked to Bankman-Fried and FTX given that FTX claimed to make money by trading cryptocurrencies, an activity that carries serious negative environmental consequences and may play a role in human trafficking.
If nothing else, it should make one pause when taking advice about philanthropy from MacAskill and the EA organizations who claim that they have unlocked the formula to do the “most good” with each dollar. If these “experts” failed to see what appears to be outright fraud committed by someone they were close to, why should we look to these utilitarians to learn how to be effective with our philanthropy?
2 thoughts on “Sam Bankman-Fried’s downfall is more than a black eye for Effective Altruism”
Trying to be an effective altruist, defending utilitarianism as a moral theory and setting up a charitable organisation provide no guarantee that you won’t back the wrong horse, be fooled, or make choices that do more harm than good. Egoists, deontologists, virtue ethicists and people who don’t set up charitable organisations make mistakes too. We’re all human, including Will MacAskill.
It would seem at the very least that SBF is a tainted donor, and his donations may also be tainted. From my perspective, one important query is whether EA related nonprofits have not only failed to vet their donors, but have encouraged tainted donations. If they have accepted tainted donations are they complicit in the wrongs, indeed the human rights violations, that created SBF’s wealth. Has EA been engaged in a little reputation laundering for SBF? See Giving Now (OUP 2022). Should the EA related nonprofits, that have received SBF donations, return them?