Crisis managers warn Bankman-Fried: Shut up

“Every time he opens his mouth, he raises civil and criminal liability,” said Niki Kristof, a Washington-based strategic consultant who previously held senior political communications roles at Uber and Google. “Silence costs nothing, but it seems he can’t.”

Bankman-Fried’s failure to lower the pipes fueled public fascination and government scrutiny surrounding the collapse of FTX and its related businesses. As his one-time image as a benevolent crypto tycoon slowly revealed that he was often a sham, it made him a bigger target for prosecutors and regulators, while tarnishing the wider industry as many of his clients suffered financial losses.

Sarah Feinberg, a former Obama administration official, said: “If I were to give him advice now, I would tell him that every moment, every second, every cell of your brain should go to making people whole.” runs his own strategic consulting firm.

Some lawmakers, especially those who have warned that cryptocurrency poses a threat to the public, would love nothing more than to use Bankman-Fried as a pinata.

“I’m always happy to hear from anyone who’s running to destroy our economy,” Sen said. Elizabeth Warren (D-Mass.) told reporters earlier this month.

Department of Financial Services of the House Maxine Waters (D-Calif.) may invite the disgraced former billionaire to testify in public hearings next month As part of an investigation into how Bahamas-based cryptocurrency exchange FTX went belly up. His committee is holding the first of a series of hearings on FTX’s death on December 13.

Waters has not yet released a list of witnesses for the hearing, but said on Nov. 16 that he expects to hear from Bankman-Fried, as well as FTX and its affiliated investment firm Alameda Research. Bankman-Fried resigned from FTX, which declared bankruptcy on November 11.

The sudden and spectacular collapse of FTX caused billions of dollars in losses to the exchange’s customers and caused cryptocurrency prices to collapse.

FTX’s new CEO, John Ray III, a corporate restructuring veteran who also helped bring Enron down, alleged in bankruptcy filings that FTX suffered from widespread internal failures that allowed Bankman-Fried and members of his inner circle to misuse company resources .

Any missteps could provide fodder for officials looking to sink their teeth if Bankman-Fried appears at the House hearing. The SEC and Department of Justice are charging FTX and Bankman-Fried with possible violations of market and consumer protection laws.

She’s already rattled off potential investigators, with a Vox reporter posting a conversation in November in which Bankman-Fried called “regulators a dick.”

Kristoff said testifying before Congress would “create a sworn record for prosecutors to refer to when Sam is inevitably charged with fraud.” Bankman-Fried and FTX did not respond to requests for comment for this story.

Bankman-Fried also poses a conundrum for lawmakers. With the recent statements of the new CEO of FTX as “vague and misleading”, there is a risk that he may misrepresent or cause confusion during the hearing.

“I don’t expect Sam Bankman-Fried to testify before Congress amid some allegations of criminal activity and fraud,” Sen said. Cynthia Lummis (R-Wyo.), one of the crypto industry’s biggest champions on the Hill, told reporters earlier this month. “I think these discussions will take place more at the level of investigation and regulation.”

Embarrassing executives usually try to avoid Capitol Hill testimony. One exception is former New Jersey governor and U.S. senator John Corzine, who testified at a hearing on the 2011 failure of brokerage firm MF Global. MF Global’s bankruptcy rocked Wall Street as it recovered from the 2008 financial crisis and sparked investigations after client money went missing.

Corzine — once a senior executive at Goldman Sachs — later paid $5 million to settle regulatory charges that MF Global misappropriated nearly $1 billion in client funds. He avoided criminal punishment.

Rather than follow in Corzine’s footsteps, PR experts say, Bankman-Fried should focus on FTX’s downtrodden customers.

“If the House committee isn’t going to give checks to the people you cheated on,” Feinberg said, “that’s probably not what you should be spending your time on.”

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