Sam Bankman-Fried said it's 'not who I am' to shun the press. But legal experts say his recent interviews could come back to haunt him.
- In new media appearances, Sam Bankman-Fried openly mused about his culpability in FTX's crash.
- He denied trying to defraud stakeholders, but conceded the lax oversight of FTX's risks.
A question that's dogged Sam Bankman-Fried since he began tweet threading apologies and explanations before FTX's bankruptcy filing last month is, what must his lawyers think of their confession-prone client?
When the New York Times columnist Andrew Ross Sorkin broached the subject at Wednesday's DealBook interview, Bankman-Fried responded that his lawyers had told him, "'Don't say anything, recede into a hole,' and that's not who I am."
"I have a duty to explain what happened," he insisted, his gaze down.
But Bankman-Fried's remarks to Sorkin that he "did not ever try to commit fraud on anyone," and that there was "a massive failure of oversight of risk management and of diffusion of responsibility from myself running FTX," can be valuable leads for investigators, and come back to haunt him in court, legal experts told Insider.
"For the prosecutors, this is a treasure trove of information that they're going to pursue," said Steven Block, a partner at Thompson Hine LLP and a former federal prosecutor in Chicago. "As a defense attorney, what you're thinking is that your client is potentially locking himself into certain positions that may not be the right positions to take down the road."
FTX is reportedly facing multiple ongoing government inquiries in the US and the Bahamas, which may also determine the extent of Bankman-Fried's own potential liability. The fallout from the abrupt collapse of the crypto lending giant last month can lead to both civil and criminal proceedings, with enforcement authorities, regulators and plaintiffs attorneys all looking for recourse.
Public statements by company leaders, and even remarks made to employees, can be valuable in completing a picture that investigators often build by looking into documents like banking and financial records, and interviewing investors and other third parties.
And under the federal rules of evidence, which provide the framework that judges use to decide what pieces of evidence a jury should hear in a trial, public statements can also easily make their way into courtroom proceedings, attorneys said.
The government, for instance, could argue that press interviews can be admitted into evidence as admissions, said Marjorie Peerce, a partner at Ballard Spahr LLP who represents clients in white collar cases, and co-heads the firm's crypto and blockchain practice. Peerce spoke generally about government inquiries and defenses, and not about Bankman-Fried.
"You want to keep your powder dry as a defense lawyer until you have to surface with what your defense is going to be," she said.
Even statements disavowing deliberate wrongdoing could be problematic. Bankman-Fried told Sorkin at one point that "I didn't knowingly commingle funds," between FTX and his other company, the hedge fund Alameda Research.
"Some might say on the surface, those statements are not incriminating," said Richard Scheff, a former federal prosecutor in Philadelphia who is now a partner at Armstrong Teasdale representing clients in government investigations. "But a good prosecutor is going to look at every single word he says publicly, and they're going to try to prove if it's accurate or inaccurate."
Bankman-Fried's ABC interview with George Stephanopoulos appeared to contain a more troubling admission. "Like, I wasn't spending any time or effort trying to manage risk on FTX," he told the "Good Morning America" anchor. "And that that was obviously a mistake."
The legal calculus behind what sort of intent or actions may provide the grounds for fraud allegations can be complex. A flagrant lack of care and oversight could factor into such allegations, said Andrew Jennings, an assistant professor at Brooklyn Law School.
"That phrase really struck me as being one of recklessness as to risk, which I think could be a quite significant statement that he made," he said.
Greg Joseph and Stanford Law professor David Mills, who Semafor reported last month represent Bankman-Fried, didn't respond to Insider's email for comment Thursday evening. Representatives for FTX did not respond to a request for comment, and Bankman-Fried did not respond to a Twitter DM seeking comment.
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