SBF won’t shut up, and it’s driving lawyers mad

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In the weeks since the collapse of his crypto empire, Sam Bankman-Fried has ignored the most basic legal advice any lawyer — or even a casual viewer of television crime cases — would give: shut up.

Rather, Bankman-Fried, commonly known as SBF, has been on an apology tour, tweeting, sending DMs, and giving taped interviews to reporters about the very things that could land him in jail if he’s ultimately charged with a crime. (He wasn’t, although he’s the subject of numerous regulatory investigations and has been named in at least two civil lawsuits filed by investors.)

SBF has repeatedly admitted that he was “f—ked up”. He apologized on Twitter and in a letter to the staff. He did not shy away from press interviews. And on Wednesday, he’s expected (at least virtually) for a one-on-one with moderator Andrew Ross Sorkin at the New York Times’ DealBook Summit in New York.

“What SBF is doing is a kind of trial suicide,” Howard Fischer, a former attorney for the Securities and Exchange Commission, tells me. “Anything he says that is contradicted by admissible evidence will be taken as evidence of fraud…I don’t know if that’s a sign of unrepentant arrogance, youthful hubris, or just plain stupidity.”

An attorney for SBF did not respond to a request for comment. So did his former attorney, a well-known white-collar criminal defense attorney from the Paul Weiss firm, who dropped SBF just days after being hired as a client, citing unspecified “conflicts” that had arisen, according to Reuters.

SBF resigned as CEO when its crypto exchange FTX filed for bankruptcy on Nov. 11. A new CEO, John J. Ray III, leads FTX and more than 130 affiliated companies through bankruptcy.

For his part, Ray has made it clear that he is not a fan of SBF’s “irregular and misleading” public statements, according to a bankruptcy court filing. Ray wanted to clarify that SBF does not speak for FTX or its affiliates.

Of course, the full picture of what happened inside FTX and Alameda hasn’t fully come to light. Is there evidence of colossal mismanagement? You bet. Ray, an attorney who made his name overseeing Enron’s liquidation, called FTX’s management failures the worst he’s seen in his career.

Being bad at business is not (necessarily) a crime. But Ray’s filings appear to corroborate Reuters’ reporting suggesting that SBF may have implemented a “backdoor” into its company’s software so the movement of funds would not have triggered internal red flags. (SBF has denied implementing a “backdoor”.)

That’s the kind of allegation that federal prosecutors at the Department of Justice would snoop around on, several attorneys have told me.

And not just any federal prosecutors. FTX’s collapse is being investigated by the Southern District of New York, widely known as an elite organization with some of the best lawyers in the country. Its nickname is “Sovereign District of New York”.

“People who work in the Southern District went to the best law schools, were elected to bar exams, and worked for federal judges,” Nicholas Lemann wrote in the New Yorker in 2013. “They go after the biggest, baddest, scariest criminals: evil billionaires, the mafia, drug gangs, terrorists.”

One of those attorneys, who previously worked on the SDNY Securities and Commodity Fraud Task Force, told me, “If the allegations against Bankman-Fried are found to be true, he may be in the most serious of troubles you could possibly be in.” stuck.”

“The Southern District of New York is investigating him. And if they’re involved, there’s a good chance they’ll take the case aggressively, prosecute it and get a conviction,” said Samson Enzer, who joined Cahill Gordon & Reindel in 2021. “They rarely fail.”

Big tech is increasingly having to tighten its belts, lay off employees (Twitter, Facebook, Amazon) and rein in the perks long associated with Silicon Valley and startup culture.

The Latest: Snapchat, which earlier this year announced it would lay off 20% of its employees, is now asking workers to return to the office 80% of the time, or the equivalent of four days a week, starting next year.

Bloomberg cited an internal memo from CEO Evan Spiegel in which he told employees they might have to sacrifice some level of “individual convenience” but it would benefit “our collective success.”

President Joe Biden is in an awkward position.

On the one hand, Joe is a unionist through and through, as he so often reminds us (a Scranton Native!), on the other he’s the leader of the world’s largest economy, and the companies within that economy are practically begging Washington to help them a strike by tens of thousands of rail union members.

Here’s the deal: Biden on Monday called on Congress to pass legislation “immediately” to avert a railroad closure that could begin late next week.

Rail executives and business interests say a strike would seriously damage the US economy. Union members opposing a tentative deal struck in September say: Um, yeah folks, that’s kind of the point of a strike…

To be clear, union leaders have repeatedly said they don’t want to strike, but they believe the threat is the only way to get railroad management to negotiate their biggest yet unfulfilled demand: sick days. (And no, I mean not extra Sick days – I mean any sick days that employees currently have to take unpaid).

They say the railroads, which reported record profits last year, can afford to talk about paid sick leave.

“Railroads have an opportunity to solve this problem,” said Michael Baldwin, president of the Brotherhood of Railroad Signalmen. “If they came to the table and did that, we could move forward without action from Congress.”

Biden said he understood the union’s demand, but a rail strike would cause too much economic damage and must be avoided.

A strike would be a blow to already stretched supply chains. The cost of gas, groceries, cars, and other goods could skyrocket. A research group estimates that a week-long strike could cost the economy $1 billion.

bottom line: At the moment it looks like a strike will be averted (although of course we said that back in September and here we are again). Biden said today he was “confident” Congress could get the job done, and House Speaker Nancy Pelosi said the chamber could vote on legislation as early as Wednesday.

But any lawmaker can screw up the work on this sort of thing, and it’s not clear that everyone is on the same page.

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