Back in December, right after the arrest of Sam Bankman-Fried, founder of crypto exchange FTX, we questioned the wisdom of his nonstop media and Twitter blitz as the company cratered. Now that he’s on trial, accused of a possible $10 billion fraud, and was cross-examined this week, we have more concrete evidence that his efforts were ill-advised.

We are crisis and litigation communicators and we strongly favor speaking out and telling your side of the story. What’s crucial here is to have facts to back up your side and to work closely with your attorneys. The media strategy cannot contradict the legal strategy. Care must be taken.

Here, we see the problems with Bankman-Fried’s approach. His public utterances — which, as we pointed out in last year’s post, could be used against him in court — were vague and often didn’t make sense. He also admitted, including at The New York Times’ DealBook Summit, that he was ignoring his lawyers’ advice to keep mum. In other words, counsel and client were not on the same page.

Cross-Examination

Assistant U.S. Attorney Danielle Sassoon began cross-examining Bankman-Fried on Monday. Much of the coverage mentioned that the prosecutor was able to hit the witness hard with his own published statements. This is why attorneys often advise clients not to speak out. We don’t agree with that: It’s often essential for reputational reasons to fight your case in the court of public opinion. But, again, it must be done wisely and in lockstep with the legal strategy.

Two examples from Bankman-Fried’s visit to the witness box are instructive.

Although he has declared his respect for regulators, Bankman-Fried offered a vague response to Sassoon asking about him once saying “f—k regulators.” She was then able to point to a published text exchange with a Vox reporter in which he uttered just that, according to a CoinDesk article headlined “Sam Bankman-Fried’s Post-Collapse Media Blitz Has Clearly Backfired.”

Special Privileges

Another example is when Sassoon asked Bankman-Fried if his trading firm, Alameda Research, had special privileges, or extra “leeway,” on the FTX exchange due to margin rules not being applied to it. “I’m not sure that’s how I see it, no,” he testified, according to CoinDesk.

So the prosecutor whipped out a December interview he did with Bloomberg’s Zeke Faux, who wrote, “When I ask if Alameda had to follow the same margin rules as other traders, he admits the fund did not.”

“There was more leeway,” Bankman-Fried responded, according to Faux.

Proper Preparation

The lesson is clear. Yes, public statements can be used against you in court, whether criminal or civil. But it’s often necessary to speak out to defend yourself long before the trial begins. It can be done well — with the proper preparation.

The jury in the Bankman-Fried trial began hearing closing arguments yesterday and is expected to begin its deliberations today.

Photo Credit: Koshiro K/Shutterstock

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