Disgraced FTX founder Sam Bankman-Fried Has Another Big Problem: He Won't Shut Up
Sam Bankman-Fried, the disgraced founder of the cryptocurrency exchange FTX, isn't doing himself any favors.
Despite being charged with orchestrating one of the largest financial frauds in history and facing the prospect of spending his life in prison, he has been tweeting and giving interviews with media — all in an attempt to defend himself in the court of public opinion.
It's an unusual strategy for a high-profile criminal defendant who oversaw a company that lost billions of dollars of customer money. And it has left lawyers not involved in the case aghast, since each quotation 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 white-collar lawyer you could ask would say, 'Shut up: Keep your mouth shut, and let us do the talking,'" 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 trail of communication — including eight tweets, a Substack newsletter, and a handful of lengthy interviews with the media — that Bankman-Fried has 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 turned to 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 track.
"All my Republican donations were dark," he told Fong. "And the reason was not for regulatory reasons. It's because reporters freak the f*** out if you donate to a Republican. They're all super liberal, and I didn't want to have that fight. So, I made all the Republican ones dark."
Those comments to Fong proved unwise.
Bankman-Fried was later charged with eight criminal counts, including including wire fraud and "conspiracy to make unlawful political contributions."
Then, on Thursday, when federal prosecutors unveiled four additional criminal charges against Bankman-Fried, they included new details about their widening case against him.
In the latest indictment, prosecutors specifically cited the comments from that interview as part of their additional evidence for their charge on "unlawful political contributions."
That may not be all. Lawyers warn prosecutors could use more of the comments he's made during his trial, which is set to start in October.
Curtailing his communications
It's not just interviews that have landed Bankman-Fried in trouble. He has also been reaching out to current employees of FTX, and that could lead to more 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's a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other," they say he wrote. "I'd love to get on a phone call sometime soon and chat."
After that message came to light, 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 employees of FTX.
Why lawyers want their defendants to keep quiet
Although Bankman-Fried has not made a public comment since Jan. 19, lawyers who have dealt with prominent white-collar defendants warn that it can be a challenge to keep them quiet for long, especially if they are accustomed to living in the spotlight.
That's a potential problem for Bankman-Fried, who hobnobbed with people like former President Clinton and former quarterback Tom Brady at the height of his popularity.
Former U.S. Attorney Barbara McQuade says she's seen defendants struggle with the temptation to talk, 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 was doing was perfectly legitimate.'"
It's an approach that lawyers see at play in this case.
In his public pronouncements, the former CEO of FTX has sought to defend himself by saying he did not intend to spark losses for customers of FTX, and maintaining, above all else, that he's 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 infamous fraudsters.
"I don't think that's who I am at all," Bankman-Fried replied. "But I understand why they're saying that. People lost money, and people lost a lot of money."
Reminders of the 'Pharma Bro'
Bankman-Fried may not believe he is like Madoff, but he reminds lawyers of another young, disgraced CEO who couldn't keep quiet before his 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 spiked the price dramatically.
Shkreli was later charged with securities fraud, and instead of laying low, he courted even more notoriety in the days leading up to his trial.
He got into a public feud with the rapper Ghostface Killah and did several broadcast interviews against his lawyer's advice. Then, when his trial got underway, Shkreli wandered into the press room and badmouthed the prosecution to reporters.
That led to a court-imposed gag order, and his defense attorney couldn't hide his frustration in a widely seen video of them leaving the courthouse.
"Pharma Bro" Martin Shkreli tells @Megtirrell he can “do whatever he wants” pic.twitter.com/Fh1aBspjUJ— CNBC's Fast Money (@CNBCFastMoney) June 30, 2017
Little upside to talking
Just like it backfired for Shkreli, public relation experts also see little upside for Bankman-Fried in talking.
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 simply to call attention to himself for reasons I can't quite fathom," Garcia says.
And the public image that helped Bankman-Fried gain notoriety as a twenty-something CEO could now work against him. He became widely known for wearing shorts and t-shirts, and famously played 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 fortunes have disappeared.
"Unorthodox is okay," D'Angelo says. "Losing $8 billion among people is not, and whatever charm your cargo shorts and frizzy hair may give you an advantage in in other forums, it's not going to help here."
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