PR is the latest risky business for Sam Bankman-Fried

The recent arrest of Samuel Bankman-Fried should come as no surprise to anyone who has been following the riches-to-rags case of the failed crypto exchange FTX.

“SBF,” as the eccentric, soft-spoken CEO has become widely known, was arrested in the Bahamas following indictment by prosecutors from the Southern District of New York. The Securities and Exchange Commission is reportedly filing additional charges for alleged “violations of securities laws.” 

While the indictment was sealed, The New York Times and other outlets have reported that SBF will face charges that include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.

Get ready for a wild ride.

SBF’s saga will likely be discussed in the press for months, if not years to come. After all, the cryptocurrency ecosystem which was ostensibly so attractive to many of its investors owing to its lack of regulation has now demonstrated — on a colossal scale — why financial oversight and safeguards are sorely needed.

Almost overnight, SBF went from crypto celebrity status and media darling to pariah, a staggering fall from grace after he filed for bankruptcy due to insolvency. Since FTX went bust, at least a million depositors have been unable to access their funds.

One of the most bizarre twists has been the incredibly risky PR strategy employed by SBF. Pre-meltdown, SBF portrayed himself as the smartest person in the room. He enjoyed fawning press coverage that typically presented him as brilliant, innovative, altruistic and generous. He was a supporter of progressive causes, and he donated money to journalistic outlets, speaking publicly about the vital role of a free press. But it now appears that he was actually trying to curry favor and buy positive coverage for himself and the company.

In the days following the FTX collapse, SBF must have known that it was only a matter of time before the feds closed in and he found himself in handcuffs. Yet in the days leading up to the U.S. government taking him into custody, SBF dedicated himself to a very risky PR play that may come back to haunt him. 

Flitting from interview to interview, his goal seemed to be recasting himself in the public eye as an innocent ingenue, who had no idea that trouble was brewing within his cryptocurrency empire. Instead of being hyper-vigilant about every word he spoke, with the full knowledge that it could be used against him, SBF appears to have engaged in a calculated snow job with the press. He desperately tried to recast his image from brilliant wunderkind and savant to a naïve novice who did not really understand what had gone wrong.

The boldness and cynicism of such a strategy are startling. While the fact patterns are not the same at all, a comparison between SBF and Theranos CEO Elizabeth Holmes is nevertheless instructive:

• Both situations involved charismatic CEOs, heralded as genius innovators at the tip of the spear;
• Both principals seemed to thrive in the public eye, apparently knowing full well that they were involved in activities and behaviors that did not comport with the squeaky-clean images that they sought to present;
• Both cultivated relationships with journalists and pandered to highly regarded institutions, and
• Both CEOs were arrested and charged with fraud.

When the mystique surrounding Theranos began to crumble and Holmes found herself transformed from media darling to suspected scammer, she wisely chose to shut down the PR machine. She stopped giving interviews and largely disappeared from view.

By the time her trial eventually rolled around, Holmes had been married and was pregnant with her first child. Rather than the hard-driving, swashbuckling entrepreneur with the husky voice and wardrobe reminiscent of Steve Jobs, she had become muted and matronly.

Perhaps SBF has studied the fall of Holmes. If so, maybe he concluded that keeping quiet did her no good in the end and therefore he has little to lose by selling the image of a confused and inexperienced young CEO who simply got in over his head and made some mistakes. 
We probably have not heard the last from him; he just might be bold enough to keep giving interviews even as the charges pile up.

While his attorneys will likely advise against it, he may have convinced himself that he can talk his way out of his present predicament. 

Were I advising him, I’d counsel him to step away from the microphones and begin preparing a long-term strategy. Lean heavily upon surrogates and a savvy spokesperson to drive the messaging. Ensure that key mitigating information makes its way into outlets where it can be disseminated and amplified. Endeavor to make the story less about a single person’s culpability and more about systemic failures. And in the meantime, take concrete actions to show goodwill and offer whatever assistance you can to untangle the mess and help repay losing investors.
Continuing to seek the public spotlight will likely prove dangerously tempting for a young man who has shown a propensity for betting big on himself and seems unafraid of big risks.

Evan Nierman is CEO of crisis PR firm Red Banyan and author of “Crisis Averted: PR Strategies to Protect Your Reputation and the Bottom Line.”