Fallen boss of the FTX cryptocurrency exchange, Sam Bankman-Fried is under threat of criminal prosecution for his role in the spectacular collapse of the company. Despite the specter of heavy sanctions, “SBF” continues the media appearances.
“I have never tried to scam anyone,” assured the former muse of the crypto world at the end of November at a conference organized by the New York Times. “I clearly made a lot of mistakes and I would give anything to be able to do some things again.”
He should make a similar speech next Tuesday in front of a parliamentary committee of the House of Representatives before which he has agreed to testify.
But in the opinion of several lawyers and experts, Mr. Bankman-Fried will not be able to escape justice indefinitely.
This media offensive represents “a desperate attempt to persuade the American public and potential jurors that he had no intention of defrauding”, says Jacob Frenkel of the firm Dickinson Wright.
“The question is when we will see an indictment, not if” it will be, adds this specialist in federal investigations, who worked for the American stock market policeman (SEC).
– “Addiction” –
The seriousness of the charges against Mr. Bankman-Fried could encourage him to keep a low profile.
But the 30-year-old, who resides in the Bahamas, has chosen a radically different strategy by responding to TV interviews, appearing at public events and speaking out extensively on Twitter.
In doing so, “Mr. Bankman-Fried puts himself in further danger and acts contrary to what a competent lawyer would advise a client,” warns Mr. Frenkel.
These interventions increase the risk of false or problematic declarations and undermine a future defense strategy, believes for his part Aitan Goelman, former official within the American agency in charge of derivatives (CFTC).
“He has been honored and adored for several years,” recalls Mr. Goelman.
“Being in the limelight and having the public’s attention can be addictive. It’s impossible for him to sit still and be quiet, which would be the smartest thing to do,” says Ms. Goelman.
Mark Cohen, a criminal lawyer representing Mr. Bankman-Fried, declined to comment.
– Prodigy –
The contrite air and hesitant tone of “SBF” during his recent speeches offer a striking contrast to the reassuring image he had forged in recent years.
More than anyone, Mr. Bankman-Fried had managed to legitimize cryptocurrencies with the general public and the political class.
A graduate of the Massachusetts Institute of Technology, the son of law professors at Stanford University, he was a prodigy, appearing on the cover of financial magazines and attracting the services of celebrities for major advertising campaigns.
But FTX, valued at $32 billion at the start of the year, experienced a spectacular implosion in early November after an article by the specialized site CoinDesk on the links between the platform and Alameda, an investment fund also founded by SBF.
CoinDesk revealed that a considerable portion of Alameda’s positions consist of virtual currency FTT, issued by FTX. The price of FTT then plunged, rattling both Alameda and FTX.
Faced with massive withdrawals from its customers and running a deficit of some $8 billion, FTX and around 100 related entities filed for US bankruptcy.
– “Much of the time” –
Several billion dollars loaned to Alameda would actually be investments from FTX clients, which were presumably lost in risky investments.
Such use of these funds would constitute fraud if it violates the terms of the agreement between FTX and its clients, legal analysts have said.
Other articles in the US press have investigated whether Mr. Bankman-Fried engaged in market manipulation or whether he was guilty of insider trading through Alameda.
However, Mr. Goelman cautions against jumping to conclusions.
If the calamitous management of FTX seems established, as affirmed by the new boss of the company John Ray III, the fraudulent nature of the activities of SBF is not at this stage proven.
“These investigations take a long time,” Mr. Goelman points out.
“The idea that Sam Bankman-Fried should already be in irons is incompatible with our justice system.”