Wall Street’s top cop trains his sights on crypto

Damian Williams made history well before he brought criminal charges against FTX founder Sam Bankman-Fried over “one of the biggest financial frauds”.

In late 2021, the Brooklyn-born son of Jamaican immigrants became the first black person to be sworn in as the US attorney for the Southern District of New York, the storied branch of American justice whose jurisdiction includes Wall Street and, by extension, global finance.

In a ceremony at the Harlem Armory — paid for by Williams himself to ensure the moment was properly marked — the 41-year-old was clear about his priorities. “Abuse of the most vulnerable in our society is on the march,” he said, announcing that he had “created a brand new civil-rights unit in the criminal division” of the SDNY to tackle this scourge.

Yet it is Williams’ role in bringing the case again Bankman-Fried — who had been courted by politicians, investors and celebrities as his cryptocurrency exchange soared to a valuation of $32bn in just three years — that could cement his image as the country’s pre-eminent financial cop.

“It is going to be one of the big ones,” said a former supervisor of Williams, who noted that the indictment of Bankman-Fried came just weeks after FTX filed for bankruptcy. While Bankman-Fried was in the air being extradited from the Bahamas, Williams delivered another blow, announcing the previously secret guilty pleas of Bankman-Fried’s close colleagues Gary Wang and Caroline Ellison.

Even for an office that prides itself on being fleet-footed, it all happened “very fast”, the person said.

Previously, other authorities, including the SEC and the office of the New York attorney-general, had taken the reins when it came to going after some of the crypto world’s most notorious schemes.

But that changed when crypto markets imploded last summer. “It became an issue principally for the prosecutors — you have got to figure out who is swimming without their shorts on,” said a former senior SDNY figure.

Williams “has to focus on crypto. He has no choice,” according to another former colleague. People close to the prosecutor — who will oversee a team including experienced trial lawyers Nicolas Roos and Danielle Sassoon — said he was well suited to handle a complex cryptocurrency fraud case.

Educated at Harvard, Cambridge and Yale, Williams worked on John Kerry’s 2004 Democratic presidential campaign and did a stint in private practice at Paul Weiss before being hired by-then US attorney for SDNY, Preet Bharara. He was subsequently elevated by successive SDNY heads, and made chief of the core securities unit under Geoffrey Berman.

“I viewed Damian as a real star in an office full of stars; very meticulous, thoughtful and a very skilled trial lawyer and communicator,” said Joon Kim, a partner at Cleary Gottlieb and former acting US attorney for SDNY.

Kim chose Williams, who had come up through narcotics and securities divisions, to retry a corruption case against former New York state assembly speaker Sheldon Silver after an appeals court overturned the first verdict. Kim said he recognised someone who could “investigate highly complex matters thoroughly and fairly and also take those cases to trial”.

Williams, another former colleague said, had “earned luck”, having been “hyper-attentive to the blocking and tackling” that goes into building a case as he made his way to the top of the SDNY. An improvement in data infrastructure for processing evidence, pushed for by Williams, may have helped speed up the Bankman-Fried charges, a former prosecutor said.

Yet unlike many of his predecessors, who sparred with “main Justice” in Washington, Williams has the advantage of working under an attorney-general he knows well, having clerked for Merrick Garland, then a judge on the DC Circuit Court of Appeals, in 2007-2008.

While there is no suggestion that the relationship led to the SDNY securing the Bankman-Fried case over rival districts, “Damian needs to be careful about that relationship,” said the former senior figure at SDNY, which has long prized its independence.

Given the frenzy around the FTX case, Williams’ tactics have already drawn some scrutiny. The office has been criticised for allowing Bankman-Fried to be released to his parents’ California home on a $250mn bond, while those accused of lesser crimes have been denied bail in the district.

People close to the case said the deal was offered in order to ensure that Bankman-Fried consented to a swift extradition from the Bahamas, and spoke to the SDNY’s determination to ensure that the defendant — whose face is now globally recognisable — faces justice in New York. The same logic underpinned the agreements with the less well known Wang and Ellison, the people said.

Ian McGinley, a former SDNY prosecutor who worked on crypto-related cases and is now a partner at Akin Gump, said that generally “one of the goals of the cases is to have a deterrent value”.

A conviction of Bankman-Fried would push Williams — who has so far been among the more understated inhabitants of his office — further into the limelight.

Talk of the Democrat’s potential strengths as a candidate for elected office is predictably rife among political operatives. Beyond his record as a prosecutor, Williams’ back-story, including meeting his wife on a cheap intercity bus, would appeal to voters, one Democratic fundraiser said.

Yet Williams, who pledged to be “fiercely independent of politics” at his investiture, “is studiously apolitical in his approach,” said one former federal prosecutor who until recently worked closely with the SDNY head.

He “showed no signs” of pursuing overtly political cases for their own sake, the person said. The acquittal of Trump ally Tom Barrack by a Brooklyn jury in November proved how such cases, while attracting press coverage, could sometimes be profitless endeavours, they added.

The path from the SDNY to other national stages is well trodden — Rudy Giuliani went on to become New York City’s mayor, and James Comey to run the FBI. But friends of Williams said they had never heard him express any ambitions beyond his current role.

“I always say, I’d do this job for free,” Williams told a hall full of New York lawyers at an event last year. “There’s magic in that, to me.”