The arrest this week of Sam Bankman-Fried, founder of now-collapsed crypto exchange FTX, raises the stakes in an already tawdry situation. SBF, as he’s known, is accused of moving billions from FTX to his hedge fund and elsewhere. His arrest raises the question of whether his communications approach — to never shut up — was the smart way to go.

We’re typically in favor of speaking up and being transparent. Crisis and litigation communications are about getting your story out there. But that doesn’t mean you do so without a little aforethought. This is especially so with the threat of potential criminal charges dangling — which, here, they have been from early on.

On Monday, Bankman-Fried, 30, was arrested in the Bahamas, where FTX is based, and on Tuesday, federal prosecutors in New York unsealed their (for now) bare-bones indictment. U.S. Attorney Damien Williams called SBF’s actions “one of the biggest financial frauds in American history.”

Liquidity Problems

Ever since rumors started swirling a couple months ago about FTX’s liquidity problems, Bankman-Fried has been out there talking and talking. On Nov. 10, the day before FTX filed for bankruptcy protection, he posted a 22-tweet thread cryptically trying to explain (sort of) the crypto company’s problems and apologizing (sort of).

Then on Nov. 30, he spoke at The New York Times’ DealBook Summit. He admitted he wasn’t heeding his lawyers’ advice to hush up. He said his lawyers were telling him “don’t say anything, recede into a hole,” according to a Law360 report. “I have a duty to explain what happened.”

In a Wall Street Journal article, some observers defended SBF’s loquaciousness along the lines of: You have to tell your story. The problem is, he didn’t really tell his story that well. He seemed to obfuscate and express confusion about what happened.

The reason silence, or at least message planning, is warranted in a situation like this is that prosecutors can use public utterances against a defendant in a court of law.

Possible Defense

In a CNBC interview just before the indictment was unsealed, former federal prosecutor Renato Mariotti discussed the probability that SBF will try a “dumb CEO” defense — he didn’t know what was going on.

“The problem for Mr. Bankman-Fried: He’s talked to every Tom, Dick and Harry he possibly could and confessed his views and locked himself into a story, which will make his lawyers’ life very, very difficult,” Mariotti said. “I would go on Twitter Spaces every single day, it seemed like, and see that Mr. Bankman-Fried was conducting an interview and answering incredibly incisive, difficult questions, usually stumbling all over himself, having trouble providing cogent answers.”

Therein lies the problem. Ironically, SBF’s arrest on Monday prevented him from a scheduled speaking engagement on Tuesday — before the U.S. House of Representatives Committee on Financial Services.

Photo Credit: Koshiro K/Shutterstock

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