UNITED STATES NEWS

Sam Bankman-Fried should be jailed until trial, prosecutor says, citing bail violations

Jul 26, 2023, 12:08 PM | Updated: 1:46 pm

NEW YORK (AP) — A judge is weighing whether to revoke Sam Bankman-Fried ‘s bail after prosecutors said Wednesday that the FTX founder used the news media to harass a key witness against him and should be locked up until trial.

Judge Lewis A. Kaplan didn’t immediately decide whether to put the cryptocurrency entrepreneur behind bars, instead giving defense lawyers and prosecutors several days to submit written arguments and more information.

“I am certainly very mindful of his First Amendment rights, and I am very mindful of the government’s interest here, which I take very seriously,” Kaplan said. “And I say to the defendant, Mr. Bankman-Fried: You better take it seriously, too.”

Bankman-Fried has pleaded not guilty to charges that he cheated investors and looted FTX customer deposits. The 31-year-old, who was seen as a crypto whiz before the exchange collapsed last year, has been free on $250 million bond since his December extradition from the Bahamas. He is required to remain at his parents’ home in Palo Alto, California, and his electronic communications have been severely limited.

Assistant U.S. Attorney Danielle Sassoon said Bankman-Fried should be jailed because he gave The New York Times some personal correspondence by Caroline Ellison. She was the CEO of Alameda Research, a cryptocurrency trading hedge fund that was an offshoot of FTX.

“Having contact with the press alone isn’t witness-tampering” or grounds for revoking bail, Sassoon said. But, she said, by setting out to tarnish Ellison in an international publication read by many potential jurors in the New York-based case, Bankman-Fried “crossed a line toward inappropriately influencing jurors, intimidating that witness and sending a message to other prospective jurors.”

She said Bankman-Fried “went on a media tour” after FTX collapsed and continued after his arrest. She said equipment the government monitors as part of his bail conditions revealed that he has made more than 1,000 phone calls to various journalists, including over 100 calls to the Times reporter and over 500 calls to author Michael Lewis.

Lewis, known for his colorful books about the financial industry, is working on a book on Bankman-Fried titled: “Going Infinite: The Rise and Fall of a New Tycoon.”

Prosecutors have concluded that no bail conditions will ensure Bankman-Fried wouldn’t try to tamper with or influence witnesses, Sassoon said.

Bankman-Fried’s lawyer, Mark Cohen, told Kaplan that prosecutors notified him only a minute before the hearing that they planned to ask for his client’s incarceration.

Cohen said his client should not be punished for trying to protect his reputation in any way he can, including through the media to offset so many stories that portray him in a bad light.

The lawyer said Bankman-Fried should be free because he was “integral to our defense” as attorneys sift through 4.3 million documents — a number which he said prosecutors describe as unprecedented.

Cohen said it would be “almost impossible to work with my client” if he were behind bars, especially since some documents must be viewed through a special program that would not be available in jail.

FTX entered bankruptcy in November when the global exchange ran out of money after the equivalent of a bank run.

Ellison pleaded guilty in December to criminal charges that carry a potential penalty of 110 years in prison. She has agreed to testify against Bankman-Fried as part of a deal that could result in leniency.

He is scheduled for trial on Oct. 2 in Manhattan.

Prosecutors said last week that Bankman-Fried’s lawyers had confirmed that he gave The New York Times documents that were not currently part of trial evidence. The newspaper subsequently published an article with the headline: “Private Writings of Caroline Ellison, Star Witness in the FTX Case.”

Earlier this year, Kaplan suggested he might jail Bankman-Fried after prosecutors complained that he found ways to get around the restrictions on his electronic communications.

In February, prosecutors said he might have tried to influence a witness when he sent an encrypted message in January over a texting app to a top FTX lawyer, saying he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”

At a February hearing, the judge said prosecutors described conduct by Bankman-Fried after his arrest “that suggests to me that maybe he has committed or attempted to commit a federal felony while on release.”

United States News

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Sam Bankman-Fried should be jailed until trial, prosecutor says, citing bail violations