FTX founder keeps talking, ignoring typical legal strategy
NEW YORK >> For federal prosecutors, Sam Bankman-Fried could be the gift that keeps on giving.
After the November collapse of FTX, the cryptocurrency exchange he founded in 2019, Bankman-Fried unexpectedly gave a series of interviews intended to present his version of events. He was indicted in December and charged with perpetrating one of the biggest frauds in U.S. history — and he’s still talking, either in person or on the internet.
The atypical chattiness for a criminal defendant is likely causing BankmanFried’s attorneys to scratch their heads, or worse. Prosecutors can use any statements, tweets or other communications against him at his trial, which is scheduled for October.
“Prosecutors love when defendants shoot their mouths off,” said Daniel R. Alonso, a former federal prosecutor who is now a white-collar criminal defense attorney. If BankmanFried’s public comments before trial can be proven false during the trial, it may undermine his credibility with a jury, he said.
Bankman-Fried returned to Manhattan federal court on Thursday for a hearing into whether his bail package will be altered to prevent witness tampering. Prosecutors say he sent an encrypted message over the Signal texting app on Jan. 15 to the general counsel of FTX US, a likely witness for the government.
Lawyers were scheduled to submit more information to Judge Lewis A. Kaplan by Monday before he makes a decision about the bail package. BankmanFried has been confined with electronic monitoring to his parents’ home in Palo Alto, California, since December.
Before its collapse, FTX was the world’s second-largest crypto exchange and Bankman-Fried, 30, was its CEO and a billionaire several times over, at least on paper. Celebrities and politicians alike vouched for FTX and its founder, and Bankman-Fried was considered a leading figure in the crypto world.
However, the broad collapse of cryptocurrencies last year caused severe financial stress for numerous companies in the crypto universe, from lenders to exchanges to firms focused on investing in digital assets. FTX sought bankruptcy protection in November after customers pulled out their money in the crypto equivalent of a bank run.