He won’t shut up: NPR
FTX founder Sam Bankman-Fried arrives in US federal court in New York for a hearing on February 16, 2023. As he awaits trial, the disgraced former CEO defends himself in the court of public opinion.
Timothy A. Clary/AFP via Getty Images
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FTX founder Sam Bankman-Fried arrives in US federal court in New York for a hearing on February 16, 2023. As he awaits trial, the disgraced former CEO defends himself in the court of public opinion.
Timothy A. Clary/AFP via Getty Images
Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX, is not doing himself any favors.
Despite being charged with orchestrating one of the biggest financial frauds in history and facing the prospect of spending life in prison, he has tweeted and given interviews to the media – all in an attempt to defend himself in court public opinion.
It’s an unusual strategy for a high-profile criminal defendant who oversaw a company that lost billions of dollars in customer money. And that has dismayed lawyers not involved in the case, since every quote and tweet from Bankman-Fried is effectively a gift to prosecutors, who can use that material to build their case against him.
“I think every lawyer you could ask would say, ‘Shut up: Shut up and let’s talk,'” says Rebecca Mermelstein, a partner at the law firm O’Melveny.
Through a spokesman, Bankman-Fried declined NPR’s request for an interview.
Bankman-Fried in trouble over political donations
The communications trail — including eight tweets, a Substack newsletter and a handful of lengthy interviews with the media — that Bankman-Fried left behind is already coming back to haunt him.
For example, a few weeks before Bankman-Fried was arrested, crypto vlogger Tiffany Fong interviewed him by phone, and the conversation revolved around Bankman-Fried’s campaign contributions. (He reportedly donated about $40 million during the 2022 midterms.)
During that interview, Bankman-Fried admitted to Fong that he had steered money to candidates in a way that is difficult to trace.
“All my Republican donations were dark,” he told Fong. “And the reason wasn’t for regulatory reasons. It’s because reporters get pissed off if you donate to a Republican. They’re all super liberal, and I didn’t want to have that fight. So I did all the Republican shit.”
Damian Williams, United States Attorney for the Southern District of New York, announces the indictment of Samuel Bankman-Fried on December 13, 2022 in New York City. Bankman-Fried now faces a total of 12 charges that threaten to put him in prison for the rest of his life.
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Damian Williams, United States Attorney for the Southern District of New York, announces the indictment of Samuel Bankman-Fried on December 13, 2022 in New York City. Bankman-Fried now faces a total of 12 charges that threaten to put him in prison for the rest of his life.
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These comments to Fong turned out to be unwise.
Bankman-Fried was later charged with eight criminal counts, including, among other things, wire fraud and “conspiracy to make illegal political contributions.”
Then, on Thursday, when federal prosecutors unveiled four additional criminal charges against Bankman-Fried, they included new details about their expanded case against him.
In the latest indictment, prosecutors specifically cited the comments from that interview as part of their additional evidence for their charge of “illegal political contributions.”
That may not be all. Lawyers warn prosecutors may use more of the comments he has made during his trial, which is due to start in October.
Limiting his communication
It’s not just interviews that have landed Bankman-Fried in trouble. He has also reached out to current employees of FTX, and that could lead to several consequences.
Prosecutors say Bankman-Fried used an encrypted messaging app on Jan. 15 to contact the general counsel of FTX’s U.S. subsidiary.
“I would really love to reconnect and see if there is a way for us to have a constructive relationship, use each other as resources when possible, or at least know things about each other,” he wrote. “I’d like to take a phone call soon and chat.”
After the report came out, the judge overseeing the trial imposed new restrictions on Bankman-Fried’s bail, prohibiting him from sending encrypted messages and others that disappear after they are read, and he restricted Bankman-Fried from contacting current and former FTX employees.
An exterior view of what was then known as FTX Arena before an NBA basketball game in Miami on November 14, 2022. Before the collapse, FTX had hired celebrities such as former quarterback Tom Brady to pitch the exchange and for a time acquired the rights to the Miami name -Dade Arena.
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An exterior view of what was then known as FTX Arena before an NBA basketball game in Miami on November 14, 2022. Before the collapse, FTX had hired celebrities such as former quarterback Tom Brady to pitch the exchange and for a time acquired the rights to the Miami name -Dade Arena.
Megan Briggs/Getty Images
Why lawyers want the accused to remain silent
Although Bankman-Fried has not made a public comment since Jan. 19, lawyers who have dealt with high-profile white-collar defendants warn that keeping them quiet for long can be a challenge, especially if they are used to living in the spotlight.
That’s a potential problem for Bankman-Fried, who hobnobbed with the likes of former President Clinton and former quarterback Tom Brady at the height of his popularity.
Former US attorney Barbara McQuade says she has seen defendants struggle with the temptation to speak, especially politicians who have found themselves embroiled in scandal.
“‘If I could just talk to you long enough, I can explain it all away,'” she imagines a defendant thinking. “And I can tell you that I did it was perfectly legitimate.”
It’s an approach that lawyers see at play in this case.
In his public statements, the former CEO of FTX has tried to defend himself by saying that he did not intend to cause losses to customers of FTX, and above all claimed that he is not a bad guy.
For example, days before Bankman-Fried was arrested in the Bahamas, ABC News anchor George Stephanopoulos asked him if he felt it was fair for people to compare him to Bernie Madoff, one of the world’s most notorious fraudsters.
“I don’t think that’s who I am at all,” Bankman-Fried replied. “But I understand why they say that. People lost money, and people lost a lot of money.”
Days before he was arrested in the Bahamas, Sam Bankman-Fried did an interview with George Stephanopoulos of ABC News.
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ABC News/”Good Morning America”
Days before he was arrested in the Bahamas, Sam Bankman-Fried did an interview with George Stephanopoulos of ABC News.
ABC News/”Good Morning America”
Reminders about “Pharma Bro”
Bankman-Fried may not think he’s like Madoff, but he reminds lawyers of another young, disgraced CEO who couldn’t keep quiet before trial: “Pharma Bro” Martin Shkreli.
He first sparked controversy after his company bought the rights to a drug used to treat people with compromised immune systems and then dramatically increased its price.
Shkreli was later charged with securities fraud, and instead of laying low, courted even more notoriety in the days leading up to his trial.
He got into a public feud with rapper Ghostface Killah and did several broadcast interviews against his lawyer’s advice. Then, as his trial began, Shkreli wandered into the press room and bad-mouthed the actors to reporters.
That led to a court-ordered gag order, and his defense attorney couldn’t hide his frustration in a widely viewed video of them leaving the courthouse.
Little up to talk
Just as it backfired for Shkreli, public relations experts also see little upside for Bankman-Fried in speaking out.
Fred Garcia, who teaches crisis management at New York University and Columbia University, says he can’t understand what Bankman-Fried “hopes to get out of it.”
“Other than just calling attention to himself for reasons I can’t quite understand,” Garcia says.
And the public image that helped Bankman-Fried become known as a twenty-something CEO could now work against him. He became widely known for wearing shorts and t-shirts, playing a video game during a pitch meeting with a prominent venture capital firm.
But Anthony D’Angelo, a professor of public relations at Syracuse University, says that persona is unlikely to play well any longer among FTX customers, now that they fear their wealth has disappeared.
“Unorthodox is fine,” says D’Angelo. “Losing $8 billion among people is not, and whatever charm your cargo shorts and frizzy hair might give you an edge in other forums isn’t going to help here.”
