FTX founder and Democrat megadonor Sam Bankman-Fried’s ‘I’m Sorry, I fucked up‘, ‘It wasn’t me, but I’ll get to the bottom of this whole mess’ act needs some serious work, according to lawyers cited by Bloomberg.
Bankman-Fried, who just filed a new application for bail before the Bahamian Supreme Court (set to be heard on January 17th), has been playing dumb and blaming competitors since day one.
For weeks, FTX founder Sam Bankman-Fried has been previewing a possible defense to criminal charges over the cryptocurrency exchange’s collapse: I made mistakes but I didn’t mean to do it.
But that’s probably not going to cut it now that he’s been arrested in the Bahamas and charged by federal prosecutors in New York, several lawyers not involved in his defense said. According to the indictment unsealed Tuesday, Bankman-Fried, 30, defrauded FTX customers and investors by using at least $1.8 billion of their money for personal expenses and risky bets by its sister trading firm, Alameda Research. -Bloomberg
“I wish things worked out in the end’ is more of a (guilty) plea allocution than a defense,” according to former federal prosecutor Harry Sandick. “It’s hard to see that being a triable defense. It’s hard to know what the whole thinking was in terms of those public statements, or if there was very much thinking.”
SBF’s current posture is aimed at suggesting the FTX meltdown was unintentional, but the eight-count indictment against him clearly lays out how he lied over and over again about fund transfers. What’s more, prosecutors likely have cooperating witnesses from FTX or Alameda who have flipped on SBF.
“Although this is an extremely high-profile case, the indictment is a no-nonsense, no-frills document,” said Jaimie Nawaday, another former federal prosecutor. “The factual statements are short and plain. The theories of fraud are very standard — lying to get money, lying about what you’re doing with the money.”
While the bare-bones indictment doesn’t indicate what actual evidence the US government has against him, according to Nawaday, SBF’s public statements may have been more than enough rope for the FTX founder to have hung himself in court. If those statements are later contradicted, it would be devastating for his defense, Sandick also notes.
“There’s a saying that a false exculpatory statement is almost as good as a confession,” he said.
Robert Frenchman, a New York white-collar defense lawyer, said Bankman-Fried’s claims that FTX’s collapse resulted from management missteps aren’t all that convincing, even without the prosecution showing its hand. In particular, Frenchman said, the relationship between FTX and Alameda is hard to spin as innocent. -Bloomberg
“There’s some very troubling facts here that don’t fit the mismanagement narrative,” said Frenchman, adding “I think it’s very difficult to mount that kind of a defense when the defendant is alleged to have given secret preferential treatment to his own hedge fund. Those facts surrounding Alameda are going to be much tougher to defend. They look a lot more like fraud and deception than anything unintentional.”
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