{"id":6729,"date":"2023-03-29T09:15:59","date_gmt":"2023-03-29T13:15:59","guid":{"rendered":"https:\/\/carleton.ca\/panl\/?p=6729"},"modified":"2025-02-03T21:06:56","modified_gmt":"2025-02-04T02:06:56","slug":"what-can-the-philanthropic-sector-take-from-the-downfall-of-samuel-bankman-fried-and-his-ties-to-effective-altruism-part-1-of-5","status":"publish","type":"post","link":"https:\/\/carleton.ca\/panl\/2023\/what-can-the-philanthropic-sector-take-from-the-downfall-of-samuel-bankman-fried-and-his-ties-to-effective-altruism-part-1-of-5\/","title":{"rendered":"Part 1 of 5: What Can the Philanthropic Sector Take from the Downfall of Samuel Bankman-Fried and His Ties to Effective Altruism?"},"content":{"rendered":"<p><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-2221 alignleft\" src=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Calum-Carmichael-300x332.png\" alt=\"Calum Carmichael presented his paper, Charitable ends by political means?, comparing 16 countries\u2019 approaches in regulating the kinds and levels of political activities that philanthropic entities could undertake without losing their fiscal privileges.\" width=\"200\" height=\"221\" srcset=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Calum-Carmichael-300x332.png 300w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Calum-Carmichael-400x443.png 400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Calum-Carmichael.png 570w\" sizes=\"(max-width: 200px) 100vw, 200px\" \/>By <a href=\"https:\/\/carleton.ca\/panl\/editors\/\" target=\"_blank\" rel=\"noopener noreferrer\">Calum Carmichael<\/a>.<\/p>\n<p><strong>(The full, five-part series is downloadable as a pdf: <a href=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/What-Can-the-Philanthropic-Sector-Take-from-the-Downfall-of-Samuel-Bankman-Fried-and-His-Ties-to-Effective-Altruism-a-five-part-series-by-Calum-Carmichael-2023-1.pdf\">What Can the Philanthropic Sector Take from the Downfall of Samuel Bankman-Fried and His Ties to Effective Altruism, a five-part series by Calum Carmichael (2023)<\/a>.)<\/strong><\/p>\n<h2>Part<strong> 1: What\u2019s going on here?<\/strong><\/h2>\n<p>Prior to November 2022, Samuel Bankman-Fried (popularly known as SBF) was known as a <a href=\"https:\/\/www.nytimes.com\/2022\/05\/14\/business\/sam-bankman-fried-ftx-crypto.html\" target=\"_blank\" rel=\"noopener noreferrer\">successful and philanthropic entrepreneur<\/a>. In both his career and giving choices he aligned himself with the ethos, methods and priorities of <a href=\"https:\/\/www.effectivealtruism.org\/articles\/introduction-to-effective-altruism\" target=\"_blank\" rel=\"noopener noreferrer\">Effective Altruism<\/a> (often shortened to EA). In his early 20s, for example, he reportedly decided to work not for a charity but in finance, believing greater good would come from his earning more to give more. In 2018, at the age of 26, he founded the cryptocurrency trading company Alameda Research to profit from crypto prices being higher in Asia than America. The following year he founded the FTX Group of cryptocurrency exchanges to service the trades of Alameda and other clients, promoting his companies as workplaces of choice for effective altruists. He based the largest of the exchanges, FTX International, first in Hong Kong and then in the Bahamas to handle popular products not legal in the US.<\/p>\n<p><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-6733 alignright\" src=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-300x305.png\" alt=\"Samuel Bankman-Fried\" width=\"373\" height=\"379\" srcset=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-300x305.png 300w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-400x407.png 400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-1400x1425.png 1400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-768x782.png 768w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried-700x713.png 700w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Samuel-Bankman-Fried.png 1448w\" sizes=\"(max-width: 373px) 100vw, 373px\" \/>For both the <a href=\"\/\/www.opensecrets.org\/outside-spending\/top_donors\/2020?chrt=2022&amp;disp=O&amp;type=V\" target=\"_blank\" rel=\"noopener noreferrer\">2020 presidential<\/a> and <a href=\"https:\/\/www.opensecrets.org\/outside-spending\/top_donors\" target=\"_blank\" rel=\"noopener noreferrer\">2022 mid-term elections<\/a>, SBF was among the biggest contributors to Democratic candidates. In February 2021 he established the <a href=\"https:\/\/ftx.medium.com\/the-ftx-foundation-for-charitable-giving-5ae53178dce\" target=\"_blank\" rel=\"noopener noreferrer\">FTX Foundation<\/a> for charitable giving, donating $50 million US that year. In June 2022, with a net worth having peaked above $25 billion US, SBF signed the <a href=\"https:\/\/givingpledge.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">Giving Pledge<\/a> to donate most of his wealth during his lifetime or by will, with <a href=\"https:\/\/80000hours.org\/2021\/07\/effective-altruism-growing\/\" target=\"_blank\" rel=\"noopener noreferrer\">$16.5 billion US<\/a> from FTX sources having already been earmarked for EA causes and organizations.<\/p>\n<p>But in November 2022, all of this changed. Alameda and FTX declared bankruptcy. In December and into 2023, SBF was indicted on multiple charges of conspiracy to commit fraud, money laundering, foreign bribery and campaign finance violations. The charges came with a detailed <a href=\"https:\/\/www.sec.gov\/litigation\/complaints\/2022\/comp-pr2022-219.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">account<\/a> of steps taken by SBF and his associates to misappropriate <a href=\"https:\/\/www.nytimes.com\/live\/2022\/12\/13\/business\/sam-bankman-fried-arrest-news?action=click&amp;pgtype=Article&amp;module=&amp;state=default&amp;region=footer&amp;context=breakout_link_back_to_briefing#sec-sam-bankman-fried-sbf-fraud-ftx\" target=\"_blank\" rel=\"noopener noreferrer\">$1.8 billion US<\/a> in customer deposits at FTX International and use them to cover not only losses at Alameda, but also real estate purchases as well as political and philanthropic spending. One executive from Alameda and two from FTX \u2013 all of whom publicly identify as effective altruists \u2013 have <a href=\"https:\/\/www.nytimes.com\/2023\/02\/28\/technology\/ftx-guilty-plea-fraud.html?searchResultPosition=1\" target=\"_blank\" rel=\"noopener noreferrer\">pleaded guilty<\/a> to fraud and agreed to co-operate with prosecutors. To date, however, SBF has pleaded <a href=\"https:\/\/www.nytimes.com\/2023\/01\/03\/technology\/sam-bankman-fried-pleads-not-guilty.html?name=styln-ftx&amp;region=TOP_BANNER&amp;block=storyline_menu_recirc&amp;action=click&amp;pgtype=LegacyCollection&amp;variant=undefined&amp;is_new=false\" target=\"_blank\" rel=\"noopener noreferrer\">not guilty<\/a> on all charges. The <a href=\"https:\/\/coingape.com\/ftx-sam-bankman-frieds-sbf-trial-set-october-2-115-yrs-prison\/\" target=\"_blank\" rel=\"noopener noreferrer\">trial<\/a> is set to begin October 2023. If convicted, he could face up to 115 years in prison.<\/p>\n<p>The admitted <a href=\"https:\/\/www.forbes.com\/sites\/stevenehrlich\/2022\/12\/13\/exclusive-transcript-the-full-testimony-sbf-planned-to-give-to-congress\/?sh=90d58e03c474\" target=\"_blank\" rel=\"noopener noreferrer\">mismanagement<\/a> and alleged criminality of SBF and his associates have had wide effects. They\u2019ve caused great financial harm to the customers and creditors of FTX, as well as <a href=\"https:\/\/www.msnbc.com\/opinion\/msnbc-opinion\/ftx-collapse-sam-bankman-frieds-crypto-rcna57263\" target=\"_blank\" rel=\"noopener noreferrer\">reputational harm<\/a> to cryptocurrency markets. But they\u2019ve also intensified pre-existing criticisms and suspicions directed to not only the ethos and methods of EA with which SBF had associated himself, but also the organizations of EA and their leaders who had associated themselves with him. These include <a href=\"https:\/\/www.givingwhatwecan.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">Giving What We Can<\/a>, <a href=\"https:\/\/80000hours.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">80,000 Hours<\/a>, the <a href=\"https:\/\/www.centreforeffectivealtruism.org\/\" target=\"_blank\" rel=\"noopener noreferrer\">Centre for Effective Altruism<\/a>, and their co-founder <a href=\"https:\/\/www.williammacaskill.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">William MacAskill<\/a>. It was he who <a href=\"https:\/\/www.newyorker.com\/magazine\/2022\/08\/15\/the-reluctant-prophet-of-effective-altruism\" target=\"_blank\" rel=\"noopener noreferrer\">advised<\/a> the young SBF that greater good could come not from his working directly for a charity but from pursuing a high-earning career in finance that would allow him to give more to EA causes.<\/p>\n<p><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-6735 alignright\" src=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018-300x340.jpg\" alt=\"William MacAskill, 2018\" width=\"391\" height=\"443\" srcset=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018-300x340.jpg 300w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018-400x453.jpg 400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018-768x870.jpg 768w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018-700x793.jpg 700w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/William_MacAskill-2018.jpg 800w\" sizes=\"(max-width: 391px) 100vw, 391px\" \/>Responding to the allegations and aware of the intensified criticism, in November 2022 <a href=\"https:\/\/forum.effectivealtruism.org\/posts\/WdeiPrwgqW2wHAxgT\/a-personal-statement-on-ftx\" target=\"_blank\" rel=\"noopener noreferrer\">MacAskill<\/a> expressed his personal dismay, shame and need to reflect:<\/p>\n<blockquote><p>If FTX misused customer funds, then I personally will have much to reflect on. Sam and FTX had a lot of goodwill \u2013 and some of that goodwill was the result of association with ideas I have spent my career promoting. If that goodwill laundered fraud, I am ashamed. As a community, too, we will need to reflect on what has happened, and how we could reduce the chance of anything like this from happening again\u2026. I know that others from inside and outside of the community have worried about the misuse of EA ideas in ways that could cause harm. I used to think these worries, though worth taking seriously, seemed speculative and unlikely. I was probably wrong. &#8211;MacAskill<\/p><\/blockquote>\n<p>To be sure, the criticisms amplified since the downfall of SBF have been directed specifically toward Effective Altruism. That said, I believe they have ramifications that extend to the philanthropic sector as a whole. They deserve to be heard, reflected upon and heeded more widely.<\/p>\n<h2><strong>What are we to take from this?<\/strong><\/h2>\n<p><img decoding=\"async\" loading=\"lazy\" class=\" wp-image-6741 alignright\" src=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800-300x425.jpg\" alt=\"\" width=\"420\" height=\"595\" srcset=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800-300x425.jpg 300w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800-400x567.jpg 400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800-768x1089.jpg 768w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800-700x992.jpg 700w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad800.jpg 800w\" sizes=\"(max-width: 420px) 100vw, 420px\" \/>To support that wider attention and reflection, I\u2019m preparing a five-part series for <em>PANL Perspectives<\/em> of which this is the first part. For this series, I\u2019ve condensed the major criticisms of EA that have been linked to SBF and sequenced them into seven points grouped under three headings \u2013 as follows:<\/p>\n<p><strong>The philosophical foundations of Effective Altruism<\/strong><\/p>\n<p>1. The ethical bases of EA rely on a narrow version of utilitarianism to the exclusion of other ethical theories or considerations, such that they encourage its adherents \u2013 through their philanthropy \u2013 to pursue purportedly good ends using potentially harmful or corrupting means.<\/p>\n<p>2. Those excluded considerations include human emotion or loyalty as guides to philanthropic choice, such that EA undercuts philanthropists\u2019 agency and overlooks or opposes key aspects of human motivation.<\/p>\n<p><strong>The analytical approaches of EA<\/strong><\/p>\n<p>3. By relying on impartial reason to identify the philanthropic interventions that will do the most good, EA idealizes a methodology that quantifies and compares the value and probabilities of alternative and highly-speculative outcomes \u2013 thereby mistaking mathematical precision for truth and ignoring important qualities of human life and flourishing that are not readily quantified.<\/p>\n<p>4. This methodology \u2013 bolstered by its ethical assumptions and claims of impartiality \u2013 cultivates hubris, a condescension toward and dismissal of contending priorities or sources of information, and the impulse to define and control philanthropic interventions on one\u2019s own terms.<\/p>\n<p>5. Moreover, this methodology \u2013 by focusing on separate, numerically-evaluated interventions \u2013 overlooks the wider behavioural, institutional or systemic conditions that might not only limit the effectiveness of the interventions themselves but also cause or perpetuate the societal ills they seek to address.<\/p>\n<p><strong><img decoding=\"async\" loading=\"lazy\" class=\"wp-image-6762 alignleft\" src=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad750-300x372.jpg\" alt=\"\" width=\"419\" height=\"520\" srcset=\"https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad750-300x372.jpg 300w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad750-400x497.jpg 400w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad750-700x869.jpg 700w, https:\/\/carleton.ca\/panl\/wp-content\/uploads\/Tel_Arad750.jpg 750w\" sizes=\"(max-width: 419px) 100vw, 419px\" \/>The ultimate effects of EA<\/strong><\/p>\n<p>6. By not addressing those systemic conditions, EA takes on a conservative agenda: one that distracts from and thereby perpetuates the political, social and economic status quo and the inequalities and deprivations therein.<\/p>\n<p>7. Accordingly, in its formation, methods, application and effect, EA is elitist: it risks becoming an intellectual, do-gooder playground for the privileged who ultimately benefit from \u2013 and through their philanthropy avoid substantially changing or challenging \u2013 the inequalities of the world around them.<\/p>\n<h2>The next four part of this series<\/h2>\n<p>The four remaining parts of this series will appear in coming months. Part 2 provides an overview of EA, thereby setting the stage for the arguments, counterarguments and broader implications to follow. Parts 3, 4 and 5 cover those arguments and implications as they relate to the philosophical foundations, analytical approaches and ultimate effects. For each part, my goal isn&#8217;t simply to summarize the contended demerits or merits of EA, but to derive from them questions for the philanthropic sector as a whole \u2013 so that regardless of our different connections to the sector, we can each learn or take and possibly apply something from the downfall of Samuel Bankman-Fried and his ties to EA.<\/p>\n<p><em>Photos are courtesy of Wikimedia Commons, Abraham OFM, Cointelegraph and Sam Deere.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Calum Carmichael. (The full, five-part series is downloadable as a pdf: What Can the Philanthropic Sector Take from the Downfall of Samuel Bankman-Fried and His Ties to Effective Altruism, a five-part series by Calum Carmichael (2023).) Part 1: What\u2019s going on here? Prior to November 2022, Samuel Bankman-Fried (popularly known as SBF) was known [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2423,549,35,167],"tags":[2271,1710,2270,443,442,2275,170,66,77,2272,355,73,81,811,97,393,1827,184,2259,1828,2263,577,2274,93,408,56,2267,1671,52,98,2269,985,90,426,111,291,1945,1279,76,96,813,424,71,82,425,812,124,74,2264,2265,75,84,72,2273,423,251,182,427,434,185,229,326,578,2260,2261,371,83,2266,475,814,616,444,171,893,2262,78,79,1039,2258,2268,986],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Part 1 of 5: What Can the Philanthropic Sector Take from the Downfall of Samuel Bankman-Fried and His Ties to Effective Altruism? | PANL<\/title>\n<meta name=\"description\" content=\"By Calum Carmichael. (The full, five-part series is downloadable as a pdf: What Can the Philanthropic Sector Take from the Downfall of Samuel\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/carleton.ca\/panl\/2023\/what-can-the-philanthropic-sector-take-from-the-downfall-of-samuel-bankman-fried-and-his-ties-to-effective-altruism-part-1-of-5\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Part 1 of 5: What Can the Philanthropic Sector Take from the Downfall of Samuel Bankman-Fried and His Ties to Effective Altruism? | PANL\" \/>\n<meta property=\"og:description\" content=\"By Calum Carmichael. 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