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FTX founder Sam Bankman-Fried keeps talking — a move that lawyers say is risky

ARI SHAPIRO, HOST:

Sam Bankman-Fried is accused of orchestrating one of the largest financial frauds in history, and he won't shut up. As he awaits trial, the disgraced founder of the cryptocurrency exchange FTX is telling his version of what led to the company's collapse to anyone who will listen. As NPR's David Gura reports, that's unusual and risky.

DAVID GURA, BYLINE: Sam Bankman-Fried is defending himself in the court of public opinion months before his case goes to trial. And this is not what defendants normally do, according to Rebecca Mermelstein. She's a defense attorney at the law firm O'Melveny.

REBECCA MERMELSTEIN: I think every white-collar lawyer you could ask would say, shut up, right? Keep your mouth shut, and let us do the talking.

GURA: But Bankman-Fried has been talking since his crypto empire crumbled, posting tweets and writing email newsletters. He's been doing interviews at his parents' place in California where he's under house arrest. And Bankman-Fried's defense has been that he didn't know customer funds were being misused, claiming he, quote, "didn't try to commit fraud on anyone." Bankman-Fried told George Stephanopoulos of ABC News he made mistakes, but he's not a bad guy.

(SOUNDBITE OF ARCHIVED RECORDING)

GEORGE STEPHANOPOULOS: A lot of people look at you and see Bernie Madoff.

SAM BANKMAN-FRIED: Yeah. I mean, I don't think that's who I am at all.

GURA: As Bankman-Fried built FTX into a multibillion-dollar company, he became one of the most recognizable figures in crypto. Wearing shorts and T-shirts with unkempt hair, Bankman-Fried spent a lot of time with lawmakers, regulators and reporters. He was active on social media. Mermelstein says that when powerful people become defendants, it's to their benefit to lay low.

MERMELSTEIN: It's really challenging to represent someone who doesn't want to take your advice or wants to speak despite being advised not to do so.

GURA: Bankman-Fried's lawyer and spokesman declined NPR's requests for interviews. Leaked quotation and tweet from Bankman-Fried is a gift to prosecutors who can use that material in court. And Mermelstein believes there's at least one exchange that may have gotten Bankman-Fried into trouble already. A few weeks before he was arrested, he was interviewed by a crypto vlogger. And Bankman-Fried told her he'd steered political contributions to candidates in a way that's hard to track.

(SOUNDBITE OF ARCHIVED RECORDING)

BANKMAN-FRIED: All my Republican donations were dark, and the reason was not for regulatory reasons. It's 'cause reporters freak the [expletive] if you donate to Republicans.

GURA: Now, based on public information, it's not clear if Bankman-Fried broke any rules by the way he made those donations. Anonymous so-called dark money contributions are not necessarily unlawful. But in an eight-count indictment, one of the charges is conspiracy to commit campaign finance violations. That charge alone carries a penalty of up to five years in prison. Former U.S. Attorney Barbara McQuade is a law professor at the University of Michigan who says she understands Bankman-Fried's temptation to talk. She's seen it before.

BARBARA MCQUADE: If I could just talk to you long enough, I can explain it all away. And I can tell you that what I was doing was perfectly legitimate. And maybe he believes that to be true.

GURA: But this strategy has backfired time and time again. And crisis communication specialists also struggle to find any upside to what Bankman-Fried is doing. Anthony D'Angelo, who's spent most of his career in public relations, now teaches PR at Syracuse. And he says the image Bankman-Fried cultivated as a 20-something CEO isn't playing well now.

ANTHONY D'ANGELO: Unorthodox is OK. Losing $8 billion among people is not. And whatever charm your cargo shorts and frizzy hair may give you an advantage in in other forms, it's not going to help here.

GURA: Hundreds of thousands of FTX customers are trying to get their money back, and the penalties Bankman-Fried faces are serious. If a jury finds him guilty, he could spend the rest of his life in prison. Bankman-Fried's trial is scheduled to start in October, eight months from now. And in a recent interview, he complained of having too much downtime. That's a comment sure to make his lawyers sweat. David Gura, NPR News, New York. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.

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