(Bloomberg) -- For weeks, FTX founder Sam Bankman-Fried has been previewing a possible defense to criminal charges over the cryptocurrency exchange’s collapse: I made mistakes but I didn’t mean to do it.

But that’s probably not going to cut it now that he’s been arrested in the Bahamas and charged by federal prosecutors in New York, several lawyers not involved in his defense said. According to the indictment unsealed Tuesday, Bankman-Fried, 30, defrauded FTX customers and investors by using at least $1.8 billion of their money for personal expenses and risky bets by its sister trading firm, Alameda Research.

“‘I wish things worked out in the end’ is more of a (guilty) plea allocution than a defense,” said former federal prosecutor Harry Sandick. “It’s hard to see that being a triable defense. It’s hard to know what the whole thinking was in terms of those public statements, or if there was very much thinking.”

Mark Bortnick, a spokesperson for Bankman-Fried, declined to comment on his legal defense.

‘No-Frills’ Indictment

Prosecutors need to prove beyond a reasonable doubt that Bankman-Fried intended to defraud investors to convict him. His public claims of mismanagement are clearly aimed at suggesting that whatever happened was unintentional.

But Sandick and other lawyers point out that the sparely written eight-count indictment states that Bankman-Fried lied again and again about fund transfers. And prosecutors almost certainly have cooperating witnesses from FTX or Alameda who will testify to that effect, the lawyers said, though there’s no hint of that in the charging document. 

“Although this is an extremely high-profile case, the indictment is a no-nonsense, no-frills document,” said Jaimie Nawaday, another former federal prosecutor. “The factual statements are short and plain. The theories of fraud are very standard — lying to get money, lying about what you’re doing with the money.”

The bare-bones indictment gives Bankman-Fried no indication of what evidence the government has against him, Nawaday said. He can’t know with precision how his many public statements trying to explain the collapse of FTX as the result of mismanagement rather than fraud match up against the prosecution’s case. 

If he’s later contradicted, it would be devastating for his defense, said Sandick. “There’s a saying that a false exculpatory statement is almost as good as a confession.”

Robert Frenchman, a New York white-collar defense lawyer, said Bankman-Fried’s claims that FTX’s collapse resulted from management missteps aren’t all that convincing, even without the prosecution showing its hand. In particular, Frenchman said, the relationship between FTX and Alameda is hard to spin as innocent.

“There’s some very troubling facts here that don’t fit the mismanagement narrative,” Frenchman said. “I think it’s very difficult to mount that kind of a defense when the defendant is alleged to have given secret preferential treatment to his own hedge fund. Those facts surrounding Alameda are going to be much tougher to defend. They look a lot more like fraud and deception than anything unintentional.”

And that defense will become even harder to mount if, as is widely expected, some of Bankman-Fried’s close associates testify that there was fraud.

Alameda Chief Executive Officer Caroline Ellison, who has hired prominent white-collar lawyers to represent her, would be a prime candidate for a cooperation deal with prosecutors. Filings this week in FTX’s bankruptcy proceedings also show that senior executive Ryan Salame reported possible fraudulent transfers at the Bahamas-based exchange to local authorities days before its collapse.

Confronted with such witnesses, many white-collar defendants try to turn the tables and claim the cooperator was the true bad actor and is now lying to get leniency for their crimes. Earlier this year, former Goldman Sachs Group Inc. investment banker Roger Ng did that when his ex-boss and 1MDB co-conspirator Tim Leissner testified against him. Ng was found guilty.

Sandick said more detail about the government’s case will eventually emerge, and then Bankman-Fried and his lawyers will take stock of his situation and options. 

“You really need to make an assessment as every defendant does whether to take a plea or go to trial,” Sandick said. “You wouldn’t know that until you really got into the evidence. It’s a very personal decision.”

If Bankman-Fried does decide to strike a plea deal with prosecutors, he probably can’t expect much leniency in return, Frenchman said. The government gives generous deals to witnesses who can testify against even bigger fish, but Bankman-Fried is the main target in the FTX case.

“He’s at the top of the food chain here,” said Frenchman.

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