Disgraced FTX founder Sam Bankman-Fried had his $250 million bail withdrawn after he “leaked love letters from star witnesses” and the judge says it was evidence of witness tampering.
Prosecutors asked a judge to revoke Bankman-Fried’s release on bail, saying he tried to molest a key witness in his fraud case.
His lawyers previously insisted he should not be jailed for trying to protect his reputation from a barrage of negative news.
The 31-year-old has been under house arrest at his parents’ home in Palo Alto, California since he was extradited from the Bahamas in December on charges of defrauding investors in his companies and illegally siphoning millions of dollars worth of cryptocurrency from customers available through his FTX exchange.
Bankman-Fried’s $250 million bail package, the most expensive in US history, severely limits his internet and phone use.
Disgraced FTX founder Sam Bankman-Fried had his $250 million bail withdrawn after he “leaked love letters from star witnesses” and the judge says it was evidence of witness tampering
He faces more than 100 years in prison on charges related to the collapse of FTX
Two weeks ago, prosecutors surprised Bankman-Fried’s attorneys by calling for his incarceration, saying he broke those rules by revealing to the New York Times the private writings of Caroline Ellison, his former girlfriend and former CEO of Alameda Research, a hedge fund trading cryptocurrencies, that was one of his businesses.
Prosecutors claimed he was trying to tarnish their reputation and influence potential jurors who might be summoned to his October trial.
Ellison pleaded guilty in December to criminal charges that carry a possible sentence of 110 years in prison. She has agreed to testify against Bankman-Fried under an agreement that could result in a lighter sentence.
Bankman-Fried’s attorneys argued that he probably failed to defend his reputation because the article cast Ellison in a favorable light. They also said prosecutors exaggerated the role Bankman-Fried played in the article.
They said prosecutors tried to incarcerate their client by presenting evidence consisting of “innuendo, speculation and tenuous facts”.
Since prosecutors filed their arrest request, US District Judge Lewis A. Kaplan has issued a silence order barring those involved in the trial, including Bankman-Fried, from public speaking.
David McCraw, an attorney for the Times, has written to the judge noting the First Amendment implications of a blanket gag order and the public interest in Ellison and her cryptocurrency trading firm.
Ellison admitted a central role in a plan to swindle investors out of billions of dollars that went undetected, McGraw said.
Bankman-Fried’s $250 million bail package, the most expensive in US history, severely limits his internet and phone use
He wore a dark blue suit with brown shoes on August 11 and kept his head down as he shuffled into the courtroom
The 31-year-old has been under house arrest at his parents’ home in Palo Alto, California since his extradition from the Bahamas in December
“It is not surprising that the public would want to know more about who she is and what she has been doing, and that news organizations would seek to provide the public with timely, relevant and fairly reported information about her, as The Times in her article.” “McGraw said.
Bankman-Fried is facing a series of criminal charges related to the collapse of its cryptocurrency exchange FTX in November. He is said to have misappropriated billions of dollars from investors for lavish gifts and political donations before forfeiting shareholders their wealth
Since his controversial release in December, Bankman-Fried has been taken to a Manhattan court multiple times for angering prosecutors, including for violating his ban on using the internet to stream the Super Bowl in February.
After some back-and-forth about his internet use, a deal was struck that gave Bankman-Fried a clamshell phone with no internet and a laptop with limited features.
However, Kaplan turned down the deal because he feared he would “find a way around it,” and he expressed frustration with Bankman-Fried’s complex bail process.
The New York Times article at the center of Wednesday’s hearing was titled “Insight into the Private Writings of Caroline Ellison, Key Witness in the FTX Case,” and contained confidential information about her time as CEO of Alameda Research.
Described as being “unhappy and overwhelmed” by the role, she wrote in a February 2022 leaked message, “At the end of the day I can’t wait to go home, turn off my phone, have a drink and get away ‘it all.’
Prosecutors have asked a judge to revoke Bankman-Fried’s release on bail, saying he tried to harass a key witness in his fraud case
Bankman-Fried is facing a series of criminal charges related to the collapse of its cryptocurrency exchange FTX in November
His lawyers insist he should not be jailed for trying to protect his reputation from a barrage of negative news
Ellison’s struggle to stay afloat at the company before it dramatically collapsed is detailed in fascinating detail in the news, including a message to Bankman-Fried, in which she said she wanted to leave because Alameda was “painfully felt too connected to you”.
She also wrote that when Bankman-Fried was around, she “felt the instinct to get smaller and get smaller and quieter and submit to others,” adding, “It doesn’t really feel like as if there were an end in sight.”
Another joint document, addressed to Bankman-Fried in April 2022, revealed that Ellison’s split from Bankman-Fried “had significantly reduced my enthusiasm for Alameda” — and that she had cut communication with her ex-boyfriend.
Bankman-Fried is accused of leaking messages from his ex-girlfriend Caroline Ellison (pictured) describing her difficulties as CEO of hedge fund Alameda Research
“I felt quite hurt/rejected,” she wrote in the document, seen by the Times. “Not giving you the contact you wanted seemed like the only way to regain a sense of power.”
Ellison ran the hedge fund even though she was in her 20s, and said in the document that she didn’t feel well suited to running a large company and had trouble making decisions.
The Times claims the confidential information was available because of Ellison’s habit of recording her thoughts in a private diary and in Google Docs, which then circulated among numerous lawyers after FTX collapsed. Bankman-Fried’s attorneys also defended the alleged disclosure, saying he had the right to share information with a journalist.
Prosecutors asked Kaplan to revoke Bankman-Fried’s bail as they claimed he was the source of the information and claimed he did so to “interfere with a fair trial by an impartial jury.”
In previous court hearings, Kaplan had indicated that he was willing to revoke Bankman-Fried’s bail and have him behind bars awaiting trial.
US Attorney Danielle Sassoon also claimed on Wednesday that Bankman-Fried was a source for several stories that have surfaced in the media regarding an “ongoing campaign with the press that has now crossed a line.”
However, the former crypto chief’s legal team hit back after claiming he tried to tamper with a witness. Attorney Mark Cohen accused the prosecution of “acting as if they would never speak to the media about this case.”
The 31-year-old has been brought before a Manhattan court multiple times for upsetting prosecutors
Prosecutors alleged that Bankman-Fried was a source for several stories that surfaced in the media regarding an “ongoing campaign with the press that has now crossed a line.”
There were reportedly audible gasps in the courtroom as the government requested his imprisonment, and Cohen claimed he was not notified of the move in advance.
“One minute in court, we learned for the first time that the government was requesting detention,” he said, calling the request “not due process”.
The defense also argued that her client’s frequent public statements about his case were his constitutional right.
His lawyers cited a “toxic” approach to the press that was “almost consistently” negative, which they believe means he has “the right to counter that public narrative with fair media comment.”
The 31-year-old has made numerous public remarks and blog posts about his time while awaiting federal indictment in recent months, and Sassoon said prosecutors felt they had “put too much trust in the defendant”. when they set his bail.
She said prosecutors now believe it “is not possible to establish a reasonable set of conditions for his release” before he goes to trial and that the only way to protect the case is to lock him up.
Bankman-Fried’s defense team also said it would accept the order to remain silent, but requested that it be applied to others involved in the case.
Leaked messages from Caroline Ellison gave a glimpse into her life as CEO of Alameda Research, saying she was “overwhelmed” by the role
Cryptocurrency exchange FTX collapsed after Bankman-Fried allegedly misused billions in shareholder funds for lavish gifts and political donations
They noted that the restrictions on speaking publicly about the trial were intended to apply to “the government and any potential witnesses in this case,” likely referring to Ellison.
In a February hearing, Kaplan restricted Bankman-Fried’s ability to send messages to former FTX colleagues after allegedly coercing his former company’s legal counsel.
In doing so, he violated the terms of the largest bail in US history, when he texted his former legal team, saying, “I know it’s been a while since we’ve spoken.” And I know that things went wrong.
“I’d really like to get in touch again and see if there’s some way for us to have a constructive relationship, use each other as resources if possible, or at least check things out with each other.” phone and talk.”