The prosecutor who put Bernie Madoff in federal prison for running a Ponzi scheme that defrauded investors of billions of dollars said Friday it’s “highly unusual” for Sam Bankman-Fried to be speaking publicly about the November collapse of his crypto platform FTX amid widespread allegations of fraud.
“It’s highly unusual for a subject of a high-profile criminal investigation to be conducting media interviews and public appearances during which he discusses the conduct being investigated,” Marc Litt, who prosecuted Madoff for the Southern District of New York in 2009, told The Hill.
“No criminal defense attorney I know would recommend doing that, and no matter how careful Mr. Bankman-Fried thinks he can be, it’s almost inevitable that something he says will come back to haunt him if charges are ever brought,” he said.
Bankman-Fried agreed Friday morning to testify next week before the House Financial Services Committee after giving numerous high-profile media interviews that the panel deemed “sufficient for testimony.”
Litt said the media storm around Bankman-Fried reminded him of his time working on the Madoff case.
“The understandable current media and public frenzy around the fall of FTX is reminiscent of my experience following the arrest of Bernie Madoff,” he wrote in an email to The Hill. “The public and the media were far ahead of prosecutors, who had only just begun to investigate a massive fraud scheme.”
Litt said that “if this was in fact a massive fraud, it will take time to unravel” and “there is no need to rush to judgment.”
Calls for criminal charges to be brought against Bankman-Fried have been growing louder, with some prominent voices in the economics world calling attention to the case of FTX as a pathway into reining in not only the highly speculative cryptocurrency market but also the financial sector more broadly.
“Bankman-Fried knew what he was doing in running a Ponzi-scheme and making himself look like one of the most despicable people alive,” Dean Baker, an economist with the Center for Economic Policy and Research, wrote in a November blog post. “He may spend a lot of time in prison and be viewed with universal contempt for the rest of his life, but if his crimes lead to a crackdown on finance, he will have provided a great service to humanity.”
“Cracking down on crypto poses no real risks to the economy, only to crypto speculators. If we put a hefty tax on crypto trades, treating it like the gambling it is, it can raise revenue for the government and hugely reduce the amount of resources wasted in crypto trading,” he said, adding that downsizing the financial sector would free up money for investment economic sectors focused on physical production.
Crypto speculators who lost money in the collapse of FTX have also accused Bankman-Fried of criminal activity.
“This guy robbed me,” 36-year-old Anthony Canelo said while demonstrating on Nov. 30 outside a venue in New York where Bankman-Fried was speaking via video teleconference. “Everyone knows that he took customer funds.”
That accusation refers to the disappearance of customer funds at FTX while another company owned in large part by Bankman-Fried received a large pay-out in the form of a loan.
“I unknowingly co-mingled funds,” Bankman-Fried said at an event in November, calling his inability to pay back customer funds “a massive failure of oversight of risk management” but stopping short of saying he committed fraud.
“I didn’t ever try to commit fraud on anyone,” he said.