How Effective Altruism Power Brokers Helped Make Sam Bankman-Fried

The leading so-called philosophers of the Effective Altruism movement were warned as early as 2018 that Sam Bankman-Fried was a liar who slept with several subordinates, according to new reporting from Time. They are said to have responded in part by threatening those who warned that the golden boy was not all he seemed.

Despite formal attempts by Alameda Research staff to push Bankman-Fried out at the time, figures including Oxford professor William McCaskill continued to publicly rehash the FTX founder’s image as he built one of the biggest financial scams of all time. McCaskill and others were eventually rewarded for their defense of Bankman-Fried’s conduct in terms of funding and prestige as FTX appeared to succeed in later years.

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This was not a matter of dismissed rumors and personal grudges, but of well-documented corporate processes detailed in part by people whose entire careers are based on cultivating moral action. In April 2018, four Alameda executives called a meeting to offer Bankman-Fried a buyout to leave the hedge fund, based on already widespread concerns about his disdain for basic corporate processes and accounting.

Documents for the meeting described Bankman-Fried as indulging in “gross negligence”, being “unethical” and “misreporting figures”. Among other actions that led to the intervention, Time reports that Bankman-Fried reneged on an agreement to share ownership of Alameda and illegally registered as a sole proprietor.

According to Time, McCaskill was warned about Bankman-Fried’s behavior and the plan to oust him. So were Nick Beckstead, an EA-aligned moral philosopher, and Holden Karnofsky, co-CEO of the EA-centric funding platform OpenPhilanthropy.

McCaskill not only dismissed the allegations against Bankman-Fried, but “basically threatened” those who raised their concerns, according to Naia Bouscal, a former software engineer at Alameda.

Because McCaskill was so powerful within the Effective Altruism movement, and so many early Alameda employees were also part of the movement, his opposition discouraged and blocked those at Alameda who tried to hold Bankman-Fried accountable early on. McCaskill, according to one person involved, had the power to influence hiring options across the constellation of EA-affiliated nonprofits.

Bankman-Fried allegedly used the association with McCaskill as a boon in Alameda. “[Bankman-Fried] was like, ‘I could destroy you,'” one person characterized the then-Alameda chief’s demeanor to Time. “‘Want [McCaskill] and Holden [Karnofsy] would believe me over you. Nobody’s going to believe you.'”

Apparently, thanks in part to McCaskill’s defense, Bankman-Fried was not forced to resign after the April 2018 meeting. Instead, the four executives who originally raised the concerns left, along with about half of Alameda’s staff at the time.

McCaskill, Karnofsky and Beckstead appear to have played a direct and key role in enabling the FTX fraud – and they were richly rewarded by their pet fraudster. After FTX’s explosive growth starting in 2020, McCaskill enjoyed a wave of interest generated by the supposed Effective Altruist billionaire he had spent years cultivating. Beckstead would be named head of the FTX Future Fund, a Potemkin nonprofit that helped build Bankman-Fried’s fluffy image—and attract more victims.

The revelations are damning for the people involved, and the Effective Altruism movement as a whole. While they may not have been aware of the details of Bankman-Fried’s misdeeds, they seem to have been aware that his supposed moral stance was a fraud. Their alleged refusal to entertain allegations of what constitutes sexual assault in the workplace is particularly vile.

The ideas advanced by McCaskill and his cohort have long been paralyzed as one practical fig leaf help predatory capitalists distract others, and themselves, from their exploitative greed. FTX became the literal instantiation of that theoretical critique, demonstrating a deep rot at the heart of the Effective Altruism movement—or perhaps more accurately, a palsy-inducing tumor in the head.

Like all tumors, this one should be removed: McCaskill’s continued presence at Oxford, in particular, is a nasty, dripping blemish on the entire field of academic philosophy. Unfortunately, the FTX story has become an object lesson in how rarely such ills are actually addressed at the very top of our society—how freely the cancer of greed and self-dealing has been allowed to spread its tendrils from Oxford to Stanford to MIT to the US Congress, destroying lives to normal people every step of the way.