The recent arrest of Samuel Bankman-Fried should come as no surprise to anyone who has been following the sudden riches of failed cryptocurrency exchange FTX.
“SBF,” widely known as the eccentric, soft-spoken CEO, was arrested in the Bahamas following indictment by the Southern District of New York. The SEC reportedly filed additional charges for alleged “violations of securities laws.”
While the indictment is sealed, the New York Times and other outlets have reported that SBF will face charges including wire fraud, conspiracy to commit wire fraud, securities fraud, conspiracy to commit securities fraud and money laundering.
Get ready for a wild ride.
SBF stories may be discussed in the media for months, if not years. After all, the cryptocurrency ecosystem that was ostensibly so attractive to many investors due to its lack of regulation has now demonstrated on a massive scale why financial oversight and safeguards are desperately needed.
Almost overnight, SBF went from crypto celebrity status and media darling to pariah, falling from grace to shocking proportions after he filed for bankruptcy due to insolvency. Since FTX’s bankruptcy, at least 1 million depositors have lost access to their funds.
One of the most bizarre twists is the risky PR strategy employed by SBF. Before the meltdown, SBF painted himself as the smartest guy in the room. He relishes flattering media coverage that often paints him as brilliant, innovative, selfless and generous. A supporter of progressive causes, he donated to news organizations and spoke out about the vital role of a free press. But it now appears that he was actually trying to please himself and the company, buying positive coverage for himself and the company.
In the days following the FTX debacle, SBF must have known it was only a matter of time before the FBI shut him down and found himself handcuffed. However, in the days before the U.S. government took him into custody, SBF worked on a very risky PR campaign that could come back to haunt him.
From one interview to the next, his goal seems to be to reinvent himself in the public eye as a naïveté who has no idea that trouble is brewing for his cryptocurrency empire. Rather than being on high alert for every word he utters, knowing full well that it could be used against him, SBF appears to have engaged in a calculated game of shaming with the media. He’s desperately trying to transform his image from a brilliant child prodigy and academic to a naive novice who doesn’t understand what’s wrong.
The audacity and cynicism of this strategy is startling. Despite the fact that the pattern is quite different, the comparison between SBF and Theranos CEO Elizabeth Holmes is still instructive:
- Both situations involved charismatic CEOs who were hailed as genius innovators at the point of the gun;
- Both principals seem to be thriving in the public eye, clearly aware that the activities and behavior they were involved in did not match the clean-cut image they were trying to project;
- both cultivate relationships with journalists and cater to well-respected institutions, and
- Both CEOs were arrested and charged with fraud.
When the veil of mystery surrounding Theranos began to unravel and Holmes found herself transformed from media darling to dubious charlatan, she wisely chose to shut down the PR machine. She no longer gives interviews and has largely disappeared from the limelight.
When her trial was finally over, Holmes was married and pregnant with her first child. Instead of being the pushy, bravado, husky-voiced, smart-dressed entrepreneur that Steve Jobs was, she’s become a taciturn, homemaker.
Maybe SBF has researched the fall of Sherlock Holmes. If so, maybe he’ll conclude that keeping silent ends up doing her no favors, so he has nothing to lose by promoting the image of a confused and inexperienced young CEO who just made some mistakes in his head .
We may not have heard the last of him; he may be bold enough to continue the interview even as the allegations pile up.
While his lawyers may object, he may have convinced himself that he can negotiate his way out of his current predicament.
If I had advised him, I would have advised him to get off the mic and start preparing a long-term strategy. Rely heavily on proxies and savvy spokespeople to drive messaging. Ensure critical mitigation information goes into channels where it can be disseminated and amplified. Try to make the story less about one person’s guilt and more about systemic failure. In the meantime, take concrete actions to show goodwill and offer every possible help to sort out the mess and help return lost investors.
Continuing to seek public attention could prove a dangerous lure for a young man who has shown a tendency to bet big on himself and doesn’t seem afraid of big risks.
Evan Nierman is CEO of crisis communications firm save the banyan tree and author of Avoiding a Crisis: PR Strategies to Protect Your Reputation and Your Bottom Line.