It certainly feels like the sky is falling. There is a recession coming. Elon Musk has single-handedly taken down one of the most beloved social media platforms (and continues to show his true colors, which are not flattering). Trump announced he’s running for president—again. And then Ye announced, too, and asked Trump to be his running mate (what I wouldn’t give to hear a recording of that conversation!). Elizabeth Holmes was sentenced to 11 years in prison (that makes me so sad for her kids). All while billions of dollars have gone missing with the FTX crypto scandal.
It’s kind of a lot to take in.
But the absolute best part of everything that has happened in the past couple of weeks is around former crypto golden boy Sam Bankman-Fried. Not only did he manage to lose $16 billion when FTX went bankrupt, he managed to create one of the worst nightmares ever blamed on PR.
It’s been a long time since I’ve seen something this juicy, dumb, and ignorant. There are so many lessons to be taken from just how he handled himself with the media.
When an Exec Admits It’s “Just PR”
For those of you who don’t keep up on the crypto news (I certainly didn’t before all of this), Sam Bankman-Fried, or SBF as the media refers to him, is facing Justice Department and SEC investigations after his billion-dollar fortune collapsed and his firm, FTX, went bankrupt.
If you followed the Elizabeth Holmes story, you’ll find many similarities between the two. They both believed in effective altruism—the idea that a young person should make lots of money and donate it all to charity. They both were young (early 30s) when their businesses succeeded—and failed. They both courted politicians and billionaires. And they both were highly secretive. The difference, of course, is that Elizabeth Holmes played with people’s lives, while SBF played with people’s money. This will make a big difference when it comes to prison sentencing.
But we’re not here to judge him in the court of public opinion. This is, after all, a blog about communications. What we are here to talk about is his “off the record” conversation with Vox and his admitting that all of his talk about effective altruism and ethics was “just PR”.
Never Put Things In Writing
The story goes like this…on November 15, SBF responded to a DM from a Vox reporter after news broke that his cryptocurrency exchange had collapsed. As she said in the subsequent article, “I didn’t expect him to respond—typically, people under investigation by both the Securities and Exchange Commission and the Department of Justice don’t return requests for comment.”
Any communications pro would have forbidden it. So would the attorneys. And yet…he responded. It was after midnight in the Bahamas, where he reportedly lives, and he and Kelsey Piper, the Vox reporter, went back and forth in Twitter DMs for more than an hour where HE PUT EVERYTHING IN WRITING!
He talked about how his quest to work with regulators was nothing more than “PR”. He said he didn’t realize they were gambling with customer money. And he claimed he knew nothing about the accounting of FTX or its sister hedge fund, Alameda Research. He clearly wanted to have his say and to provide his side of the story.
The Ego Oftentimes Rules Decisions
This isn’t surprising. I’ve worked with lots and lots of executives in crisis situations where they insist they should talk to a reporter to tell their side of the story. The difference here is that those execs had communications and legal counsel on board who talked them off the ledge. SBF clearly has no one counseling him—or, if he does, he’s ignoring them completely.
And, just like anyone else who is arrogant enough to ignore the professionals they’ve hired, he did more harm than good. He admitted his do-gooder persona was all an act—claiming it was good PR at the time—and he took no responsibility for the billions of dollars lost when FTX folded. Imagine the harm this will do when he’s in court and the prosecutor shows images of the things he wrote in Twitter DMs to a reporter. Oy vey.
This is the perfect example of why executives need communications counsel in the room, along with the attorneys. If he really wanted to have his say, it probably could have been achieved—though I’m not so sure the attorneys would have been OK with it with the pending SEC and Justice Department investigations. But it should have been done with counsel in the room and on the phone or on Zoom.
It would have been rehearsed to death, and anticipated questions, such as, “What’s up with the money that got mysteriously moved from FTX after the bankruptcy?”, would have had a more clear and defined answer than, “It was a hack by an ex-employee or malware.”
Keep Your Distance
Unsurprisingly, the news about SBF talking to reporters after the fall of his crypto exchange is making everyone anxious. Since he talked to Vox via Twitter DMs, he reportedly told his attorneys to pound sand after they urged him to stop talking. Period. While openly defying them, he is putting himself in growing legal danger and harming his reputation even more—two things that could totally be avoided were he to listen to counsel.
As late as last Thursday, SBF spoke with the New York Times and told them that his attorneys have advised him to “recede into a hole.”
His response was, “That’s not who I am, and that’s not who I want to be. I have a duty to talk and explain what happened.”
Sigh. He is a nightmare. I can’t imagine any communications counsel would touch him with a 10-foot pole.
Does It Tarnish the PR Industry?
When the Vox article was published, it was a topic of discussion in the Spin Sucks Community. Some thought his dismissal of effective altruism and trying to get on the side of regulators as a PR stunt harms our industry. One member said, “I believe there are businesses out there doing the right things for the right reasons and I absolutely believe this tarnishes their intentions and actions.”
I don’t see it as that dire. Sure, it’s a crappy thing to say and do—most PR professionals are ethical and don’t do things just because it seems like the right thing at the time, even if no one believes it. This was all SBF. If he wants to blame it on PR, so be it, but we also know he’s blaming the poor accounting and losing billions of dollars on other people, too. Consider the source.
Or Just Blatant Disregard for Counsel?
The bigger issue here, in my mind, is his blatant disregard for counsel, both legal and communications. It may not be in his character to recede into a hole, but it’s what he should do while he’s under investigation. This is arrogant, at best, and litigious at worst. He’s harming no one but himself as he digs an even bigger hole.
“What SBF is doing is a form of litigation suicide,” Howard Fischer, a former SEC lawyer told CNN reporter, Allison Morrow. “Everything he says that turns out to be contradicted by admissible evidence will be taken as evidence of deceit … I don’t know if this is a sign of unrepentant arrogance, youthful overconfidence, or simply sheer stupidity.”
We can only provide the best counsel. If the client or executive doesn’t want to take it, that’s on them. It can’t be blamed on PR and one’s inability to act on their words is not the fault of PR. Certainly, if you are under investigation and you continue to talk to reporters against the advice of counsel, that can’t be blamed on PR, either.
None of the downfall of FTX is the fault of PR. If anything, a communications professional would be on the side of the legal team and recommend that SBF stop talking to reporters.
Alas. We can’t change the world and not everyone will listen. But we can provide the best counsel and know when to walk away.