FTX founder Sam Bankman-Fried has been sent to jail to await trial after a bail hearing. This decision came after a judge determined that Bankman-Fried had attempted to influence witnesses against him.
The U.S. District Judge, Lewis A. Kaplan, revoked Bankman-Fried’s bail based on allegations that he had harassed a key witness in his fraud case. This included showing a journalist the witness’s private writings and reaching out to the general counsel for FTX through encrypted communication.
Bankman-Fried’s lawyers argued that he should not be incarcerated for attempting to defend his reputation against negative news coverage. However, Kaplan concluded that there was sufficient evidence to suggest that Bankman-Fried had attempted to tamper with witnesses on multiple occasions since his arrest in December.
An appeal against the incarceration order will be filed, and Bankman-Fried’s legal team has requested an immediate stay of the order.
Currently, the 31-year-old is under house arrest at his parents’ residence in Palo Alto, California. He was extradited from the Bahamas in December on charges related to defrauding investors and illegally diverting millions of dollars’ worth of cryptocurrency from customers using his FTX exchange.
Bankman-Fried’s $250 million bail package has imposed strict limitations on his internet and phone usage.
Prosecutors surprised Bankman-Fried’s attorneys two weeks ago by demanding his incarceration. They claimed that he had violated bail rules by sharing the private writings of Caroline Ellison, his former girlfriend and the ex-CEO of Alameda Research, which was one of his businesses, with The New York Times.
Prosecutors Accuse Bankman-Fried of Trying to Taint Witness’s Reputation
The prosecution in the case against Bankman-Fried, who pleaded guilty to serious criminal charges, has accused him of attempting to tarnish the reputation of a key witness in order to influence potential jurors for his upcoming trial in October.
In their bid to secure their client’s incarceration, prosecutors relied on evidence comprised of insinuation, speculation, and minimal substantiated facts, according to Bankman-Fried’s lawyers.
Following the prosecution’s detention request, Judge Kaplan issued a gag order prohibiting any public statements from trial participants, including Bankman-Fried.
David McCraw, a lawyer representing The Times, wrote to the judge expressing concerns about the implications of an all-encompassing gag order on First Amendment rights, as well as highlighting the public interest surrounding Ellison and her cryptocurrency trading company.
McCraw emphasized that Ellison confessed to being a central figure in a multi-billion dollar fraud scheme that remained undetected, thereby justifying public curiosity and the journalism community’s responsibility to report accurately and promptly on her actions.