Lawyers are baffled by Sam Bankman-Fried’s decision to appear before a congressional committee to discuss the collapse of his crypto exchange Tuesday. They say it poses significant legal peril for him.
The founder and former CEO of now-defunct firm FTX orchestrated a media circus over the past few weeks, telling his version of the bankruptcy story to several journalists and participating in live audio conversations. On Friday, he upped the stakes, tweeting he’s willing to testify before the House Financial Services Committee.
“Mr. Bankman-Fried’s silence would be golden,” Justin Danilewitz, a white-collar defense lawyer at law firm Saul Ewing told Barron’s, citing the magnitude of the risk associated with Tuesday’s hearing.
The public comments made to reporters by the 30-year-old had their risks, but none carry the same weight as a testimony before Congress made under oath. Statutes such as the18 USC 1001 state that knowingly and willfully concealing the truth is punishable with imprisonment of up to five years or a fine.
Lawyers of investors who have lost billions of dollars are looking for evidence to use at a later point to prove that he lied in a court of law, said ZFZ law’s Michael Zweiback, who also specializes in white-collar crime.
“Every time he opens his mouth…it gives prosecutors a [chance] to disprove what he’s saying [and] every statement he makes is a road map” to find more dirt, Zweiback said. Michael Cohen, Donald Trump’s former fixer, was sentenced to three years in jail for lying to Congress among other crimes.
The standard advice for anyone who is at risk of criminal prosecution is to not speak publicly in any shape or form and “certainly don’t subject yourself to congressional questioning,” according to New York University’s law professor Stephen Gillers.
Gillers and others presume Bankman-Fried’s legal counsels had warned him but he is talking anyway.
The benefit for him here really is only “from the optics perspective,” said former Los Angeles County prosecutor Joshua Ritter. An argument could be made about the public persona of someone who has been cooperative and appears voluntarily, he added.
Zweiback agrees. “He’s trying to explain himself [and] portray himself in a sympathetic light,” he added.
But the strategy isn’t an effective one, the lawyers say. It isn’t as if you are trying to sell crypto here, “you are dealing with congressmen who expect an answer for the American public,” Criminal Attorney Ritter said, calling the disgraced FTX founder’s situation one of “incredible criminal peril.”
Bankman-Fried can still rely on his Fifth Amendment right against self-incrimination and answer selectively or none of the questions asked during the round of questioning. Former President Donald Trump, for example, has regularly practiced the art of invoking the Fifth Amendment, in one case just confirming his name.
But Bankman-Fried will likely not follow suit, he seems to have a “misplaced belief that he can talk his way out of it, ” Ritter said.
Write to Karishma Vanjani at firstname.lastname@example.org.