Thought Leadership

Disgraced Crypto Executive Sam Bankman-Fried Ignored Counsel, Gave Interviews


After his crypto-currency exchange FTX declared bankruptcy on Nov. 11, Sam Bankman-Fried went on an extensive media tour, casting himself as a somewhat hapless chief executive and denying accusations that he defrauded his customers.

As CNN reported on Nov. 29: “In the weeks since his crypto empire has collapsed, Sam Bankman-Fried has ignored the most fundamental legal advice that any lawyer — or even a casual viewer of TV crime procedurals — would give: Shut your mouth.”

Bankman-Fried, commonly known as “SBF,” was arrested on Dec. 12 in the Bahamas. According to published reports, Bahamian authorities arrested Bankman-Fried at the request of the U.S. Attorney’s Office for the Southern District of New York. The office has charged Bankman-Fried with eight criminal counts, including conspiracy to commit wire fraud and securities fraud, money laundering and conspiracy to avoid campaign-finance regulations.

Over the past month, the disgraced crypto celebrity continued to contradict legal and communications counsel by speaking freely to the press, undertaking an apology tour, tweeting, sending direct messages and giving Zoom interviews with reporters about matters that could land him in prison.

He granted interviews to The New York Times and New York magazine, among other media outlets. On Dec. 7, he told the BBC that he didn’t think he’d be arrested. He gave an hour-long interview to Forbes hours before authorities collared him.

In his press tour, Bankman-Fried denied defrauding FTX’s customers. “I didn’t knowingly commit fraud,” he told the BBC. “I was certainly not nearly as competent as I thought I was.” During ABC’s “Good Morning America,” he said: “I think I got a little cocky.

As Forbes put it: “SBF’s decision to spend most of his waking hours apologizing to anyone who would listen over the past month has been an unorthodox strategy, to say the least. The approach matches the lackadaisical way that Bankman-Fried is reported to have run FTX, with minimal regard for even the most basic financial controls.”

Reuters reported that Bankman-Fried had built a “backdoor” into FTX’s accounting system, allowing him to transfer $10 billion in FTX customer funds to Alameda, his hedge fund. At least $1 billion is now missing, and at least a million FTX depositors cannot access their funds.

In testimony before the U.S. House Committee on Financial Services on Dec. 13, John J. Ray, FTX’s acting CEO, called Bankman-Fried’s actions “old-fashioned embezzlement … taking money from customers and using it for your own purpose.” Ray also described “an utter failure of corporate controls at every level” of FTX.

For Bankman-Fried, speaking to the media before being charged was “a form of litigation suicide,” Howard Fischer, a former Securities and Exchange Commission lawyer, told CNN. “Everything he says that turns out to be contradicted by admissible evidence will be taken as evidence of deceit,” Fisher said. “I don’t know if this is a sign of unrepentant arrogance, youthful overconfidence or simply sheer stupidity.”

[Image credit: Twitter]

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