As financial collapses go, the demise of the crypto-currency exchange FTX was pretty spectacular. In its bankruptcy filing, the company estimated it had between $10 billion and $50 billion in assets and liabilities and more than 100,000 creditors.
Worse still, even before it went under, questions were being asked about the close ties between the various parts of founder Sam Bankman-Fried’s business empire, in particular possible conflicts of interest between FTX and Alameda Research, a trading firm that he also founded. The net wealth of the 30-year-old whizz, who has just been arrested, was estimated at more than $15bn (£12.8billion) immediately before the collapse of FTX.
Media Interviews
Now Bankman-Fried is doing a round of media interviews during which he is apologising and attempting to salvage his reputation and image. So, how well is he doing, and what lessons can be learnt by those interested in corporate communications? We’ve been discussing the case in our crisis communications training workshops.
It’s worth noting, first of all, that it’s taken quite a while for Bankman-Fried to say sorry. FTX filed for Chapter 11 bankruptcy over a month ago. Since then, the comments from the company and its founders’ communications have been minimal, allowing the media, both conventional and social, to fill the vacuum with comments and speculation.
In a crisis, you must act quickly. We used to talk in crisis communications about the “golden hour”. This was the period between a crisis going live and the organisation at its centre taking the initiative and getting on the front foot with its communications. In these days of social media and 24-hour rolling news, this golden period is a matter of minutes. FTX should have been ready not just with a statement but with Q&As for its spokespeople, a monitoring operation of social media and communications channels open and ready.
Apology in the Media
When the apology did finally come, Bankman-Fried Tweeted: “I’m really sorry, again, that we ended up here. Hopefully things can find a way to recover.” Its tardiness aside, we’d give this 6/10 as an apology. It’s unreserved and uses simple language, so it scores well on two points. However, the second sentence sounds rather vague and passive. “Hopefully” is hardly very confidence-inspiring, and why should “things” find a way to recover? Shouldn’t Bankman-Fried be taking the initiative here to ensure things recover?
It is essential to make it clear that you’re being proactive, getting on the front foot, and taking action to remedy or at least alleviate the situation. If you’re cooperating closely with the emergency services or any other relevant, independent authorities, that sounds even better. To be fair, Bankman-Fried told the BBC: “I’m going to be thinking about what I can do for [FTX customers]. And I think, at the very least, I have a duty to FTX users to do right by them as best as I can.” This is fine, but he should have said it earlier.
The venue for these apologies is interesting. Bankman-Fried was “speaking in a luxury complex in the Bahamas.” So, his company has filed for chapter 11 bankruptcy while many customers are in severe financial trouble, but the man himself isn’t doing too badly. Looking for a relevant human angle, the BBC earlier included quotes from a UK student who could not withdraw £2,000 that he had put into FTX. Bankman-Fried would have been better speaking from a serviced office or a modest hotel.
The Importance of Prompt Reactions
It’s also worth pointing out that his pre-crisis communications could have been better, too. Having an inflated sense of your own worth comes with the territory of being a tech whiz, especially one of the financial variety. But as crypto-sceptic Jemima Kelly of the FT points out: “This is a man, after all, who was happily posing on magazine covers while being dubbed ‘the next Warren Buffett’ as recently as August.” Beware hubris. Modesty and humility are valuable tools in a corporate communications strategy.
What the FT also describes elsewhere as a “media blitz” is being undertaken against the advice of Bankman-Fried’s lawyers, the paper says. We would never condemn the legal fraternity, given that we provide media training for lawyers and law firms. Still, we are aware that when crises erupt, it’s very often an organisation’s legal departments or lawyers who recommend “no comment.” Their reluctance is understandable as they don’t want their colleagues or client to say something that might appear to be accepting liability.
Crisis Communications Training
However, there are so many other positive things that you can say that can blunt attacks on your brand while avoiding making you a hostage to fortune. Sam Bankman-Fried has done well to offer a complete apology in simple language. Still, he should have spoken earlier and taken more responsibility and control over the situation. Given that we provide media training for fintech and start-ups, plus crisis communications, we’ll be watching carefully to see how this story pans out.
