The Industry

What if Sam Bankman-Fried’s Refusal to Shut Up Is a Good Idea?

Facing prison, the fallen FTX CEO isn’t exactly playing 3D chess. But he might be making a move.

Former FTX chief executive Sam Bankman-Fried leaves Manhattan federal court.
Substacker Sam Bankman-Fried. Timothy A. Clary/Getty Images

Since the moment his FTX crypto empire collapsed into rubble in November, Sam Bankman-Fried has declined to stop talking. It hasn’t been clear whether SBF’s seemingly endless rounds on the media circuit were about strategy or a more compulsive desire to bare his soul about how he lost billions of dollars of customers’ money—because he “fucked up,” he has argued, rather than because he perpetrated one of the larger frauds in the history of business. Whatever the reason, SBF has met very few microphones he won’t speak into, whether with the country’s premier newspapers or on crypto podcasts or in random Twitter Spaces.

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Attorneys with expertise in white-collar law watched this media blitz unfold from afar and were aghast. SBF’s actual lawyers were “very much” against him speaking, he told the New York Times. A former Securities and Exchange Commission lawyer called the blitz “a form of litigation suicide.” Yesha Yadav, a Vanderbilt Law School associate dean with a background in financial and securities regulation, explained how prosecutors would try to use SBF’s words against him: “It’s all evidence,” she told me. “All of these things that he’s doing on this media tour, it’s all potentially evidence and provides a benchmark to measure, ‘Is what he’s saying actually borne out by the facts?’”

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And you will 100 percent believe what happened next: Prosecutors did what the whole legal community knew they would do, and as they charged SBF with a wide range of financial crimes, they drew on things he’d said in the press after FTX went bust. Of course they did! One didn’t even need to be a lawyer to understand that lawyers would do the eminently predictable thing when SBF kept talking. There’s an entire federal elections angle to SBF’s legal troubles that simply wouldn’t have existed had he not hinted to YouTuber Tiffany Fong how he had potentially violated campaign finance law.

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Now, SBF is probably cooked. Maybe “cooked” means outright convictions on a whole buffet of fraud charges. Maybe it means a plea deal of some sort, though prosecutors have already struck those up with some of his co-workers, ostensibly so that they can augment their case against Bankman-Fried. It is pretty hard to beat a fully motivated Justice Department (and a similarly motivated SEC, which can impose pricy civil penalties), and so the smart money is now on SBF spending quite a bit of time in prison. There are times when the U.S. goes easy on alleged financial criminals. It doesn’t look like this will be one of them. If SBF’s goal in his extensive press junket was to make himself look like a more sympathetic figure and get governmental authorities to chill out, we can say conclusively that the plan did not work.

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But SBF is doggedly still talking. From house arrest in Palo Alto after his extradition from the Bahamas, he agreed to a lengthy sitdown with Puck. He started a Substack newsletter and published two defenses of his management of FTX: The first showed his version of FTX’s balance sheet and made the case that the exchange’s U.S. arm (which is officially bankrupt, along with the rest of FTX) remains solvent even today. He also says FTX’s international arm “retains significant assets–roughly $8b of assets of varying liquidity.” The term “varying liquidity” is doing a lot of work there, as one of FTX’s big problems was that a huge chunk of its assets were in crypto tokens that FTX created, that did not actually trade in high volumes, and whose value was tied directly to confidence in FTX’s businesses. The second SBF Substack post is an argument that the company’s law firm is overstating how bad things are, which seems hard to do.

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When SBF became the biggest story in finance a few weeks before Thanksgiving, and it was clear that authorities in multiple countries were circling him, it looked like a bad decision to refuse to shut up. Later, it was proven that his incessant public talking was a bad decision, as those authorities used his words against him in foreseeable fashion. And now that SBF has indeed been charged (he’d said publicly he didn’t think he would be), his continued speaking might be … not the world’s worst idea? I think?

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The important thing to remember about SBF’s situation is that it’s dire. He has pleaded not guilty to the charges against him, but the mathematical likelihood is that, like almost all federal defendants, he never goes to trial. A bunch of lawyers with financial crime expertise expect that he’ll eventually make a deal and change his plea.

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There are really only three potential benefits that could accrue to SBF by continuing to let words fly out of his mouth and off his keyboard: One is that he somehow convinces the authorities involved in FTX’s bankruptcy process that the company really can make a lot of customers whole. It does not seem at all like the key people in that proceeding would want to listen to SBF, but hey, maybe. It’s a Hail Mary. If fewer FTX customers lost a bunch of money, and the scale of those losses was smaller, that might help SBF. A many-billion-dollar fraud will be punished more heavily than a pilfering of fewer billions.

Another possibility is that SBF is trying to sow doubt about his villainy in the minds of eventual jurors, or at least field-test how one defense might work on them. This one is also pretty shaky, because as Timothy B. Lee explained in Slate, SBF’s Substack arguments do not exactly deal with the things he’s charged with doing. But the mechanics of FTX’s collapse are thick stuff that even lots of financial journalists might not understand in full. Given an apparent lack of recordkeeping, even the company’s bankruptcy CEO has said he has had a challenging time piecing everything together. Maybe SBF believes he could confuse some people who might eventually decide his fate. Bloomberg’s Matt Levine argues that SBF’s defense of his balance sheet is at least a defense, if not a great one: that, yes, his FTX-associated hedge fund lost a bunch of customers’ money, but it did so in the course of rational moves that the market blew up.

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Then there is a third possibility, which doesn’t rule out the other two: SBF is in genuine denial about his actions, or he’s aware of them but can’t stomach others seeing him in a maximally unfavorable light. In this version, he has an insatiable desire to convince as many people as possible that he is a do-gooder with the best interests of his customers at mind. He’d never steal from them. He would simply lend out their money to a hedge fund he also owned, and if that hedge fund lost that money, it was unfortunate, but certainly not the result of fraud.

You could imagine SBF wanting very much to feel that way. Wouldn’t you? This may not change his legal fate, but not everything is chess. Everyone has to sleep at night, and there’s a good chance that the bed SBF eventually tucks himself into isn’t exactly comfortable.

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