Why doesn’t EA divest from crypto?

After Sam Bankman-Fried (SBF) was arrested for massive fraud in November, there has been a reckoning in the EA movement to which SBF belonged. I’ve linked to several critics discussing how SBF’s actions could have been attributed to EA philosophy and practices, and even offered my own humble commentary.

Of course, it’s very easy to get distracted by philosophical arguments, and miss what’s staring in our face. The much more obvious takeaway from the whole affair is: EA was overinvested in cryptocurrency. Cryptocurrency is evil, why were they invested in it at all?

Yes, fraud can come from any sector, and no, not every person involved in crypto is fraudulent to the same degree as SBF. No, SBF is not “proof” of the depravity of crypto. What SBF proves, is that EA has been supportive of, and dependent on crypto. EA insiders must have already known, and maybe some readers already knew, but I didn’t know! I didn’t know EA had so much crypto in it! Why is that? And why don’t they stop?

The most likely and obvious answer is that many people in EA are convinced that crypto is good, or at least not convinced that it’s bad. And if any EA folks are anti-crypto, they are either unable or unwilling to do anything about it.

In general, I am pessimistic about ever persuading people in EA of anything, because they’re the sort of people who demand conformity to their own rigorous style of argument. No, I don’t have any new arguments as to why crypto is evil. Instead, I observe that crypto-skepticism is curiously muted in EA. Rather than expecting someone like me to supply a criticism of crypto, EA should be spending its own damn analytical, educational, and institutional resources to learn how to invest ethically.

Let’s look at what people have said about crypto in the EA forums.

Crypto as a cause area

From February 2021, “The Transformative Potential of Cryptocurrencies”. This is an article proposing that crypto as a possible cause area—that is to say, something EA could donate to in order to produce good in the world. Among other things, they make the absurd argument that crypto is good for the world because some people get rich from it.

2) Smart individuals (or lucky early-adopters) can become, or have become quite rich by utilizing the enormous growth of the crypto market which certainly is transformative for the individuals in question

Along similar lines, we have “The altruistic case for Bitcoin (specifically)” from September 2022. Its general argument is that Bitcoin circumvents the influence of the government on fiat currency.

In order to interpret these articles, it’s important to understand that they do not present consensus viewpoints. Rather, they are intended to challenge the consensus in some way. We have to infer the consensus from the white space in the arguments. What we’ve learned about the consensus, is that crypto is usually seen as a speculative investment, rather than a cause area.

Crypto as a liability

Arguing in the other direction, we have “Is EA over-invested in crypto?” from January 2022. This post speculates that if they invest too much in crypto, the high risk may offset potential returns. The post goes on to say:

This isn’t a theoretical question. EA already has a lot of money held in crypto, both through Sam-Bankman Fried’s holdings and through many individual EAs’ portfolios. Crypto is a notoriously high-risk / high-reward asset class and holding wealth in crypto for patient philanthropy is implicitly taking a high-risk bet. We should be explicit about whether we think that’s a good idea or not.

Remember, this article does not present a consensus viewpoint, but is intended to challenge the consensus.  What we’ve learned is that EA invested in crypto not just through SBF, but also through individual portfolios for “patient philanthropy”. Furthermore, we learned that EA typically doesn’t talk about it.

Patient philanthropy, by the way, refers to the practice of investing money now so that more money can be donated later. Given that this is a common practice, it raises the question, why doesn’t EA talk more about the choices of what to invest in? They talk a lot about different cause areas, but do they ever talk about different investment areas? Do they ever consider a tradeoff between investment returns and positive impact?

I know there are some real issues with ESG investing, but in a community that loves to analyze, this seems worthy of an analysis. I’m afraid of what EA would do with this idea… but they could construct their own ESG standards if they find the current ones are unsatisfactory.  I can offer a rudimentary starting point for a new standard: what if you invested in all the same stuff, minus the crypto?

The next article is “Crypto Markets, EA Funding and Optics” from July 2022. This article highlights comments from SBF saying that crypto is in a speculative bubble, and argues that the people who stand to lose the most are the poor and uneducated. Finally, the article predicts a funding and optics disaster for EA when the crypto crash comes. Applause, applause.

However, I would go much further.  Knowingly investing in a speculative bubble, as SBF did, is unethical. You’re hoping to win money not by building value, but by playing a zero sum game with other traders. (Really, it’s negative sum for crypto, because of gas fees.) EA ought to stand against such methods of making money.

A reckoning for crypto?

Now for some articles that appeared after SBF’s fraud was revealed. First, “The Effective Altruist Movement is Not Above Conflicts of Interest”, from December 2022. This is actually a link and summary of an article written by an external critic prior to the SBF scandal. The article argues that crypto is neither politically nor morally neutral. And since so much EA funding comes from crypto, there is a conflict of interest that prevents them from criticizing crypto.

The next article is “Cryptocurrency is not all bad. We should stay away from it anyway.” from December 2022. Despite the hedging in the title, this is the most vicious critique of crypto I’ve seen within EA so far.

The question “does the EA leadership have the expertise to pick out non-flameout crypto companies” has been answered with a definitive no.

EA is still in the charity business, and the charity business is extremely dependent on reputation. Most charitable foundations do not get embroiled in Enron scale financial fraud.

It’s good that that the SBF scandal provoked at least some crypto-skeptics to speak up, but I think basically nothing will change.  In the comments you can find polite pushback, for example:

Thanks for your fair, candid take on the industry. I agree with some of what you’ve said and disagree with other parts.

I work for Glo, an EA-aligned crypto company, so this is near and dear to my heart […]

There you can abandon all hope.  Despite a few voices arguing against crypto, crypto is just too entrenched in the culture, and the community is too polite to ever unroot something that has been entrenched.

The article is framed partially as a response to another article by Scott Alexander titled “Why I’m Less Than Infinitely Hostile To Cryptocurrency”.  The main argument is about the usage of cryptocurrencies in developing countries, an analysis seems to presume that what it’s doing in those countries is good.  Alexander’s thesis is funny because you wouldn’t think that a community known for ruthless optimization would settle for something that they are merely “less than infinitely hostile” to.  But no, Alexander thinks the most important thing after the SBF scandal is to defend against anti-crypto extremists like me, because that’s just where his priorities lie.

The low hanging fruit

There are a lot of high-minded critiques of EA out there. Lack of internal diversity causes them to miss out on ideas that a more diverse community would recognize. Reliance on wealthy people makes them unwilling to fight the systems that created that wealth. Earning to give practically encourages the most exploitative career paths.

But perhaps these critiques lack specificity, so let’s add some in. Lack of internal diversity causes EA to be dominated by the viewpoints of techies who tend to be into crypto. Reliance on wealthy people such as SBF makes EA unwilling to fight the systems that created that wealth such as crypto. Earning to give practically encourages the most exploitative career paths such as when SBF was advised by EA leaders to follow his career path. It all points to crypto.

And I’m not saying that crypto is the sum total of all problems in EA, far from it. It is, however, the lowest hanging fruit.  So obvious, so easy to eliminate. At this point their hand is practically forced by consideration for their own public image. And they still won’t do it, because they are true believers.


Earlier I happened to be looking at the Givewell page, and noticed that they had some accountability reports explaining mistakes they had made. Apparently they had accidentally lost $4,600 to a crypto scammer who asked for a refund for a donation they didn’t make. It’s a pretty small loss in the scheme of things, and they adequately explain the causes of and solutions to the problem.

But, it does raise the question. Why are they accepting crypto donations? Let the cryptofolks sell their own tokens.

Scratch the surface, and you can find a lot of EA institutional support for crypto.


  1. says

    Cryptocurrencies are just that — currencies, a sort of money, which at least a few people find useful for conducting international transactions without the headache of always having to swap dollars for rubles for euros etc.* I understood this when I first heard of bitcoin; all the additional romanticization about libbidy and independence from Big Gummint was bullshit, and cast serious doubt on the motives and credibility of all the crypto fanboys.

    And like all other currencies, state-managed or not, it’s useful as a medium of exchange, but not so good as an actual investment, since it never actually creates value or has value in itself, and is not, like stocks or bonds, a part of a larger enterprise that actually makes and sells things for more money.

    I’ve known all this for a long time. SBF and all those crypto-clowns on the scene today have absolutely no excuse not to understand how empty and false their “investment” always was, and always will be.
    * Of course, there would still be the problem of swapping their bitcoin revenues for whatever local currency their own employees would need to be paid in — it’s pretty improbable that most of their landlords, grocery stores, credit-card issuers and clothing stores would readily accept bitcoin as payment.

  2. says

    @Raging Bee #2,
    Glo is described in the very last link in the postscript. It’s a cryptocurrency that donates money to GiveDirectly, a charity. I really didn’t read into it before because I was exasperated by the very idea, but…

    Glo is a stable coin backed by real assets, like Tether. They invest entirely in treasury bills. So, if I understand correctly, they’re basically a bad bank that dodges regulations. There are some really obvious superior alternatives like: have people invest in their own money into whatever assets match their own risk tolerance. Or, just start a bank. At best, this is a good idea burdened by crypto. At worst, another scam taking advantage of lack of consumer protections in the space.

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