⚡️ Reboot Reacts: SBF Gone Wild
⚡️ Reboot Reacts: SBF Gone Wild
7 mini-essays on what this means for EA and crypto's future
Each day this week has brought a new wave of tweets and allegations about fraudulent crypto trader and famed EA moneybag Sam Bankman-Fried. While it’s been fun tracking each bombshell that comes out (most recently, SBF’s wild DMs with journalist Kelsey Piper), I want to spend this newsletter taking the long view: What does this all mean for the future of effective altruism (EA) and crypto?
To answer this, I assembled and edited a collection of 7 mini-essays from Reboot community members. Investigating topics from billionaire philanthropy to consequentialism to institutional decentralization, they use SBF as a case study to examine how EA and crypto have become sites for harm, then interrogate the possibility of disentangling the field from the failure.
(If you aren’t caught up, check out the Vox explainers on the FTX collapse and SBF first.)
on effective altruism
grappling with power
The dramatic and rapid collapse of SBF and his crypto empire over the past week shocked the very institutions and movements that supported him, from VC firms to effective altruists. The implosion has rightfully led to a reckoning within the EA community as they consider how SBF was guided by the same utilitarian calculus the movement prides itself on.
Notwithstanding SBF’s true perspective on EA, it is clear the movement had a great deal of influence on him and he in turn exerted significant influence on EA this past year through funding. This was a particularly formative period in which EA moved into politics and media, and shifted resources to longtermism (SBF is a strong longtermist). EA philosopher Will MacAskill trusted and collaborated closely with SBF personally and professionally for years.
This incident indicates a need for far more caution within EA when building and scaling institutions. Fundamentally, EA demonstrates an inability to fully grapple with power—how it affects institutions, epistemics, and politics—and an unwillingness to take the implications of uncertainty seriously. This combination, unchecked by decentralization or pluralistic decision-making, is extremely dangerous for a movement that aspires to mainstream influence.
EA has captured elites exceedingly well with an explicit strategy of gaining traction in prestigious universities and high-earning groups within tech and finance. This elite-driven theory of change risks cooptation, motivated reasoning, and myopic decision-making. Since shifting elite priorities at the margins also shifts institutional and societal priorities, EA leaders should encourage more humility and diversity of strategy and worldview when thinking about bettering the world for the long-term.
Theoretically, EAs discuss the importance of considering moral and epistemic uncertainty. In practice, this is not sufficiently addressed through a deep commitment to robust pluralism in philosophy and institutions, a necessary element in managing uncertainty. There is uncertainty in our values now and in the future, sources of and pathways to existential risk, and our fundamental ability to shape the long-term. The level of speculation required here necessitates even more caution around an elite theory of change. This likely includes reducing excessive reliance on individual billionaire funders. It also requires a restructuring of overcentralized EA institutions for greater oversight, accountability, and engagement with different theories of value and change.
Archana is a research fellow at the Princeton Center for Information Technology Policy.
against efficiency-maxxing
In past debates about the philosophical underpinnings of effective altruism, many of its defenders would point to object-level agreement. A critic might be told, “You also care about ending poverty and malaria, protecting the future of humanity, and doing the most good. You may dislike the axioms we start from or our strict Bayesian approach, but you’re criticizing men and women pursuing the same end.”
After Sam Bankman-Fried’s downfall, this argument now rings hollow, precisely because it was true. What was unique about SBF? The amount of money he disbursed didn’t dwarf that of other billionaire philanthropists: like others, he promised more than he gave. Neither were the targets of his donations especially notable: his most idiosyncratic cause, AI alignment, sat alongside prosaic political donations on behalf of his business interests, along with a range of stray causes, from State Department reform to programming languages.
The parts of his drama that feel novel, in the end, were those driven by his philosophy. The polycule, the efficiency-maxxing on-site psychologist, and the ultimate siphoning of several billion dollars of customer funds, were the direct result of his radical act utilitarianism.
Other actors aren’t responsible for his behavior, and the effective altruism community has swiftly condemned both his actions and his reasoning. Everyone’s common-sense moral intuitions feel vindicated: don't steal, don't lie, don't lie about stealing. Beneath those intuitions, there’s a deeper one: that the road one takes to an end shapes one’s ability to achieve that end.
Philosophers from Aristotle to Iris Murdoch have criticized the same entity under various names: utilitarianism, behavioralism, consequentialism. They’ve claimed virtue is more akin to “seeing things rightly” than to choosing correctly between options. They seem vindicated, too.
Santi is the Executive Director of Interact and the Senior Editor of Institute for Progress.
on EA’s light
I'm sad that the careless actions of the executives of FTX and Alameda Research caused great harm to so many people, chiefly of all the customers of FTX who reasonably thought that their money was safe.
I'm disappointed that many grantees of the FTX Foundation may now need to pause or even permanently stop their projects after their funding dried up overnight. These projects aim to preempt future pandemics, remove lead from drinking water, support underprivileged kids in India, and ensure that artificial intelligence helps us build a better future rather than a dystopian one, among other worthy causes. The people behind these projects are earnestly and competently trying to make the world a better place, and were not at all aware of or responsible for the schemes that FTX pulled. Some of them will lose their jobs and will have their lives majorly derailed because of events outside of their control.
I'm also upset that these incidents will cast a shadow on EA, even though I don't see a compelling story for how the EA community could've reasonably averted this catastrophe. It appears that no one outside of FTX/Alameda was aware of FTX's misuse of funds and deception beforehand, and few within the EA community would endorse the actions that they took, risking tens of billions of others' money and the world's trust in us in order to donate a few hundred million to effective charities. Even for strict utilitarians, which doesn't accurately describe most of the EA community, that isn't net good. These actions are not the kind that we condone. But the world will still blame the EA community and EA philosophy for this situation, and everyone will be worse off when we are less able to leverage resources to help the world.
I am proud of EAs for publicly disavowing the actions of FTX, and for empathizing with those that have suffered as a result of this fiasco. I am proud of us for being open-minded and humble enough to try to figure out what we should've done differently to prevent this, and what we should do differently in the future to prevent something similar from happening.
Lastly, I am sending my EA friends that have suffered because of this situation my love and empathy. We will get through this, and we will continue to be a light in the world.
Luke loves people and is a member of the EA community. His employer was recommended for a grant by the FTX Foundation. His thoughts and words are his alone.
on crypto
anger, sadness, and satisfaction
Three reactions dominate for me:
Anger and frustration at the intellectually dishonest, self-interested, ladder-climbing, virtue-signaling asshole grifters that perpetrated this scheme, funded it, legitimized it, profited from it, etc. Many will try to claim naivety, but this is truly blood money, and even prior to the unraveling, engaging in naive self-deception to rationalize your own self-interest isn't a defense. (Will there be any accountability or learning? I don't know, but I hope so.)
Sadness—for the enormous number of people who lost money, particularly retail (real people will die, lose their homes, etc.).
A real degree of relief or even satisfaction that so many bad actors are going to get flushed out of the space, as gut-wrenching and painful as that flushing process will be. From the start it was pretty straightforward to many people looking with a clear head (read: no bags, no wishful thinking about how one might personally capitalize on the bubble by starting another nonsense company) that SBF's entire orbit was dodgy, and a magnet for grift. Much of the Solana ecosystem stunk to high heaven, the Jump stuff looked predatory, and the vast majority of crypto exchange/trading/speculation activity is built on hollow promises and massively overinflated value. 90% of so-called "crypto startups" create zero or negative value for the world and are built on either deliberate dishonesty or naive self-deception that justifies self-interest. At some point a correction was due, and a collapse in the most spectacular fashion really makes it clear why certain people were in the space.
"Applied cryptography, blockchain, and decentralized technology" continues to be an incredibly important civilization-scale technology vertical in the long term; and "crypto trading" continues to be largely a haven for the worst kinds of grift. Good riddance, and if nothing else I'm cautiously optimistic that the camp of the former now has a window of opportunity to try to build back the narrative, slowly and gradually over time, with plenty of (additional) obstacles now but at least a slightly clearer playing field.
Anon is a crypto founder and researcher.
refactoring crypto-politics
In 1996, John Perry Barlow wrote "The Declaration of Independence of Cyberspace", a poetic proclamation of victory in the battle for a free and open web; an affirmation of what the internet could mean both socially and politically. But just a decade later, platforms like Facebook began their rise to power and the vision for an open, semantic web was quickly forgotten in favor of something as benign as a "like" button within a social walled garden.
Over the years I worry that the same thing has happened to web3. It has slowly (and then all at once) turned from a relatively grassroots movement aimed at transforming our relationship with money in a post-financial crisis, post-Snowden world to a place where institutions are once again encouraged to grow systemically too big to fail. It has become a place where we can engineer our own disasters more openly and transparently.
SBF’s fraud was not accomplished alone. He was supported by people in web3 and beyond who have forgotten what a new system of value could mean and why communities like Ethereum emerged in the first place. He was supported by people whose primary motivation for forking the existing system was to be on top. This is a disappointment, it is a tragedy, and it has caused a lot of harm. But it is not an indictment of web3 (or the decentralized web) generally.
Rather than proudly declaring that “crypto is dead”, I am more convinced than ever that we can and should work towards a world with new forms of open source, community-owned infrastructure, and where public goods for any local (even digital) community can be provisioned in a mutualist way that facilitates and strengthens trust between people rather than diminishing it or abstracting it.
Centralized exchanges and centralized philanthropic initiatives like effective altruism are the antithesis of that. Perhaps some of the most cynical among us think it's actually +EV to have a massive centralized entity rise to prominence only to become this decade's Enron. Perhaps others want to see it all burn anyway. But the reality is we need less unaccountable institutions, whether in the form of FTX or in the form of legacy platforms being bought and sold by billionaires.
For our politics to be prefigurative, we have to actually build new ideas rather than just criticizing existing ones. And it is acceptable to build solutions to problems locally without the burden of expectation that all forms of intractable wicked societal problems are also remedied. Let’s not write off a decade’s worth of work because of bad actors, let’s not lose the potential to maintain our privacy, to create community currencies, or to build back trust with each other. Let’s build a future worth fighting for.
Scott is a Co-Founder of Gitcoin, an internet-native community for building and funding digital public goods. He's also an active steward for web3 projects like ENS, KERNEL, and Optimism.
rug pull #23048
In his 1986 book The Whale and The Reactor, Langdon Winner cites two physical constructions as examples of the political nature of technological artifacts. One example is the Southern State Parkway, where Robert Moses attempted to segregate the beaches of Long Island by building overpasses too low for city buses—presumably filled with poor New Yorkers—to drive under. Given this design, the parkway remains imbued with Moses’ racism. Winner’s other example is a nuclear reactor. Given its immense physical power in a world where such power is exploited, the reactor’s maintenance requires a constant authoritarian hierarchy of control and violence.
In this cursory metaphor, it’s only human to want to believe that crypto’s politics are analogous to the politics of the New York highway system. Sure, there are aspects which are immoral and rotten, but the broader system is not necessarily imbued with those same beliefs. In fact, the broader network’s politics might even be altruistic! In the continuing fallout of Sam Bankman-Fried’s wrongdoings, this is what I truly hope is the case for the crypto industry. Maybe the politics of crypto trading platforms are just the politics of financial trading platforms. Maybe crypto technology’s real politics lie elsewhere, in a belief system rooted in more than self enrichment.
That narrative would be easier to believe if this was the first time that crypto has been used to steal from people who bought into its dream. Though there are some individuals contemplating how token frameworks can be used for social good, the culture of getting rich quickly is present across the vast majority of the crypto industry. It’s fairly easy for such a culture to lose track of its morality. Right now, FTX seems to be merely the largest take in a long history of rug pulls, scams, and outright theft. At a certain point, this theft becomes intractable from the technology enabling it.
Maybe, instead of being the network of highways, crypto is actually Winner’s nuclear reactor: technology which—in current society—can only be implemented as it is primarily implemented now. There are no alternative politics, no different belief system which can flourish. This narrative is much easier to believe.
Jake lives in Seattle, where he works as a software developer.
beyond financialization
The degree to which SBF bought credibility with the establishment was an institutional failure. Days after he disclosed on the internet that over 90% of customers’ deposits were unaccounted for by FTX, the New York Times published an interview without any critical angle at all. Meanwhile, lawmakers in DC expedited bills he helped write, which would undercut decentralized competitors, while leaving convenient loopholes for centralized exchanges.
SBF admitted to the cynicism himself in a tell-all interview with Vox. “Regulators can’t do it… they don’t protect customers at all. They can’t distinguish between good and bad.”
But many in the crypto industry never identified with SBF’s values. His highest profile chain, Solana, gave up both decentralization and engineering soundness; it was known for going down multiple times a year and being run on a network of corporate servers, run by high-frequency trading firms. Bankman-Fried’s ideals go against the values-driven philosophy that Bitcoin, Ethereum, and other early projects brought to the space.
So there’s an optimistic view too, where the collapse of degenerate financial schemes clears the way for less toxic cultures to emerge.
There are technologically and culturally interesting applications in the space, like avant-garde music NFT marketplaces, digital self-executing crypto art, and decentralized Minecraft worlds. Crypto networks have accelerated progress in zero-knowledge proofs and homomorphic computation, and supported smaller applied research projects, like verifiable proofs that a server sent you a web page (which would enable portable credit scores, and a lot more). Without crypto, these advances would have stayed in the research lab, but now have a path to becoming self-custodial technology used by millions of people.
These advances may not command front-page features in Bloomberg and Fortune in the same way as FTX. But if we only see crypto in speculative terms, we miss the most interesting things about it—how it increases the surface area of technology, and creates new places where weird, interesting, and novel things can exist.
Raymond is a researcher working on peer-to-peer decentralized applications that run without blockchains.
Reboot publishes essays on tech, humanity, and power every week. If you liked this or want to keep up with the community, subscribe below ⚡️
🌀 microdoses
Are you like “wow, I still haven’t read enough takes on EA and crypto this week”? You’re kind of nuts, but you’re in luck! Check out Reboot’s crypto archives or our provocation and replies on “ineffective altruism.”
Chaoyang Trap on how Chinese basketball fan app Hupu became an incel fandom.
Failed Senate candidate Blake Masters spent college indoctrinating fellow members of his vegetarian co-op into the libertarian tradition, leaked emails show.
💝 closing note
Thanks a ton to everyone who submitted a response this week! There are still perspectives missing and debates to be had—in particular, I’d be keen to publish more on what crypto regulation and consumer protection should look like—so I’d love to hear what you think via a comment or a pitch.
Are we gonna make it?
Jasmine & Reboot team
Brilliant responses sharing with students who are all asking these questions!