Sam Bankman-Fried.
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Sam Bankman-Fried was a proponent of effective altruism: earning as much as possible to give your wealth away.
With FTX’s collapse, plans to fund fellowships and a basic-income program have been scrapped.
Researchers and business-ethics professors said he damaged the movement he’d helped supercharge.
The collapse of Sam Bankman-Fried’s cryptocurrency exchange, FTX, has left a movement that promised to give billions to charity in tatters, with commentators scratching their heads over its funding strategy.
Bankman-Fried had advocated effective altruism, a philosophy that calls on followers to earn as much as they can so they can give as much as possible to charities and causes that benefit the greatest number of people.
The 30-year-old, who was once one of the richest people in crypto, had pledged to give 99% of his earnings to charity every year.
He had a huge influence on the effective-altruism movement, which counts Silicon Valley tech workers and Oxford University academics among its fans.
Luke Kemp, a research associate at the University of Cambridge’s Centre for Existential Risk, told Insider that Bankman-Fried was not only “the poster child” but “the financial backbone of the movement.”
The UK nonprofit 80,000 Hours, which promotes effective altruism, estimated in 2021 that Bankman-Fried was personally responsible for about $16 billion in future contributions to effective-altruism causes, about a third of an estimated $46 billion total.
Bankman-Fried previously told Bloomberg he gave away $50 million in 2021.
“A while ago I became convinced that our duty was to do the most we could for the long run aggregate utility of the world,” Bankman-Fried said earlier this year when he signed the Giving Pledge, a commitment from some of America’s wealthiest people to give the majority of their money to charity.
In an interview at the DealBook Summit on Wednesday, Bankman-Fried said he’d been thinking about disease, animal welfare, and pandemic prevention and “what could be done on a large scale to help mitigate those.”
“There are a lot of things that I think have really a massive impact on the world,” he said, “and ultimately, that’s what I care about the most.”
But since FTX collapsed, details have emerged suggesting that Bankman-Fried led a lavish lifestyle; he’s said to have spent thousands of dollars a day on meals for FTX staffers and owned a yacht worth millions of dollars. This is in stark contrast to the image Bankman-Fried crafted: sleeping on a beanbag, wearing company-branded clothes, driving a Toyota Corolla, and largely shunning personal luxuries.
‘Devastated’
Bankman-Fried was the main funder of Future Fund, a charitable project run by the FTX Foundation. After FTX filed for bankruptcy protection in mid-November, the entire Future Fund team — including Will MacAskill, the Oxford academic seen as a cofounder of effective altruism — resigned.
In a statement, the five people said they were no longer able to do the fund’s work or process grants and felt “devastated to say that it looks likely that there are many committed grants that the Future Fund will be unable to honor.”
“We are so sorry that it has come to this,” they said, adding that “in our personal capacities, we are exploring ways to help with this awful situation.”
“We joined the Future Fund to support incredible people and projects,” they said, “and this outcome is heartbreaking to us.”
The fund’s website said it made grants to nonprofits and individuals and invested in socially impactful companies. It said the fund had committed $160 million as of September 1, though it’s unclear how much of that has been disbursed.
The fund was also set to provide money for a “Future Fellowship” at MIT, where Bankman-Fried studied. The MIT Media Lab’s website said fellows would have received “full stipend and tuition as well as $25,000 per year in research costs for ambitiously benevolent projects that could not be accomplished anywhere else.”
The first fellows were set to start in September 2023 — but in a statement on November 16, MIT’s Media Lab said it would not go ahead with the fellowship.
The New York Times reported that the Future Fund had also promised $600,000 to Equity and Transformation, an antiracism nonprofit in Chicago, but that the money never arrived. The nonprofit said on November 11 that it had planned to use the funding for a guaranteed-income trial in the city but had to delay its launch, with the hope that it could fund it through other donations.
Science groups that had received money from the Future Fund told the magazine Science in mid-November that they were unsure of their funding’s future.
‘We feel shaken’
Brian Berkey, an associate professor of legal studies and business ethics at the University of Pennsylvania’s Wharton School, said FTX’s collapse had “absolutely” damaged the effective-altruism movement.
“There’s no question about that,” he said.
Kemp described the damage as both financial and reputational.
In a November 16 statement, 80,000 Hours said, “We feel shaken by recent events, and are not sure exactly what to say or think.”
It said it would remove examples on its website where Bankman-Fried “was highlighted as a positive example of someone pursuing a high-impact career, since, to say the least, we no longer endorse that.”
Kemp argued that FTX’s collapse made the movement’s governance look “so top-down and so gullible that it was easily and enthusiastically exploited by a single individual who was in his 20s when he did it.”
Berkey added that it would give “ammunition” to longtime critics who would see Bankman-Fried’s actions as tarnishing the entire movement.
Dustin Moskovitz, a Facebook cofounder and effective altruist, said in a Twitter thread on November 12 that “either EA encouraged Sam’s unethical behavior, or provided a convenient rationalization for such actions.”
“Either is bad,” Moskovitz said.
He added, “I don’t know yet how we’ll repair the damage Sam did and harden EA against other bad actors.”
Frank J. Oswald, a lecturer in communication and ethics at Columbia University, was more optimistic about effective altruism’s future — he said it now has the opportunity to “refocus itself” and add moral constraints around maximizing earnings and benefits.
A crypto gamble
Kemp told Insider that it was “just mind-boggling” that the effective-altruism movement had been set to receive a significant amount of funding from crypto, “an area which is renowned to be highly volatile and has a really high base rate of scams.”
“As a risk-diversification strategy, it’s really weird and silly,” he added.
But Berkey said he thought Bankman-Fried would have been weighing potential risks and rewards when he decided to go into crypto.
“Probably most effective altruists would think there are going to be cases in which it’s worth taking a risk of failing and perhaps ending up with nothing,” Berkey said, “if the potential upside and the probability of achieving that upside are high enough.”