SBF’s Own Words Prove His Downfall

If you’ve read enough Shakespeare, you’ll notice the most memorable characters are typically imbued with a fatal flaw.

And that fatal flaw will masquerade, for a time, as a virtue, until it ultimately becomes the character’s undoing.

For Sam Bankman-Fried, the former chief executive of bankrupt cryptocurrency exchange FTX, it is safe to say his gift of gab – which briefly catapulted him to riches and Wall Street fame – has been his fatal flaw in the face of extraordinary charges holding him responsible for one of the greatest financial frauds in history.

Even as he faced seven criminal counts, including securities fraud and money laundering, and up to 110 years in prison, Bankman-Fried persisted in talking, opining, and tweeting over the past year, offering up a constant stream of thoughts and feelings to authors, bloggers, podcasters and journalists – even when he was on house arrest – and submitting testimony to Congress under oath, which was used against him at trial.

In fact, it is hard to remember when such a high-profile executive spoke so much and so often ahead of his criminal trial, against the advice of counsel. Throughout the proceedings, nearly everyone around Bankman-Fried had to tell him to put a sock in it – including the judge and his own counsel – with journalists struggling to adequately capture his avalanche of verbiage in such colorful terms as “word salad” and “can’t shut up.” (Fortune even managed to squeeze both into one very long headline, reading, “Sam Bankman-Fried can’t shut up. His ‘word salad’ answers were almost 75 percent longer, on average, than his three FTX lieutenants.”)

Journalists Danny Nelson and Nikhilesh De, covering the trial for CoinDesk, wrote, in high-florid fashion, “During a blistering cross-examination by Assistant U.S. Attorney Danielle Sassoon, Sam Bankman-Fried voluntarily defenestrated his unrecognizably svelte frame into a treacherous pit of legal whoopsie-daisy that even Judge Kaplan tried to save him from – and failed.”

And this passage, from the same journalists, was particularly telling: “Sam ran headlong into the flames of his own making. Toward the end of the overlong day, Sassoon asked him if he believed that safeguarding customer assets meant not embezzling their money. It was a gimme of an objection from the defense that Judge Kaplan inevitably sustained. Not to be deterred, Sam plowed ahead and said, while basically smirking, yes. ‘Haven’t you been sitting here for four weeks?’ an exhausted though definitely amused defense counsel Mark Cohen chided his renegade client, after reminding him that he didn’t need to answer things Judge Kaplan ruled non-answerable. The courtroom giggled. Judge Kaplan threw up his hands and laughed.”

That’s basically Bankman-Fried’s testimony in a nutshell. While most legal analysts watching the trial (with their mouths hanging open) agreed that Bankman-Fried’s decision to take the stand in his own defense was a poor one, others pointed out that with his case flailing, he had little to lose. Especially since he could potentially spend the rest of his life in prison.

At any rate, Assistant U.S. Attorney Sassoon skillfully hoisted Bankman-Fried on his own word-salad petard on cross examination, prompting most onlookers to conclude he will not be spared by the jury when it considers the charges against him.

That said, don’t underestimate Bankman-Fried. His ego, determination and utterly unflappable belief in himself is now approaching legendary proportions. With a preponderance of evidence against him, it seems likely he will be convicted on at least some of the counts. But there could be a hung jury, he could appeal, or the convictions could be overturned.

Much hangs in the balance, but with closing arguments already starting Wednesday, the jury is expected to hand down a decision by late this week or early next.