FTX founder Sam Bankman-Fried is heading back to prison after a judge granted the request of federal prosecutors and revoked his bail on Friday.
The twist in his case follows repeated violation of his bail conditions – mainly, speaking to the press. Judge Lewis Kaplan rejected Bankman-Fried’s plea for deferred detention pending an appeal, resulting in his direct remand into custody following a court proceeding in New York. He will stay in custody until his criminal trial commences on October 2nd.
Since his arrest last December following the implosion of FTX, Bankman-Fried has been in and out of court on pre-trial hearings, with Friday being the latest. He was bailed on a $250 million bond that came with the condition that he remains at his parents’ Palo Alto, California house.
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Bankman-Fried’s continued dealings with the press were described by the Justice Department as a “pattern of witness tampering and evading his bail conditions,” which he was earlier in July warned about by Judge Kaplan.
In the motion seeking Bankman-Fried’s detention, the government asserted that in recent months, the defendant had dispatched more than 100 emails to media outlets and initiated over 1,000 phone conversations with members of the press.
According to CNBC, prosecutors said Bankman-Fried’s release of confidential diary entries belonging to his former girlfriend, Caroline Ellison, to the New York Times was the final straw.
Ellison, former Research co-CEO of Alameda – Bankman-Fried’s failed cryptocurrency hedge fund, had pleaded guilty to federal charges in December 2022 and is cooperating with prosecutors. She is expected to serve as a key witness for the prosecution.
“Faced with a series of conditions meant to limit the defendant’s use of the internet and the phone, the defendant pivoted to in-person machinations,” the prosecution said of Bankman-Fried, whose revised bail conditions include restricted internet access and a ban from smartphone use.
The report noted the government as further saying that Bankman-Fried engaged in over 100 telephone conversations with one of the authors of the Times article before its publication, often spanning around 20 minutes each.
The prosecution portrayed Bankman-Fried’s actions as an endeavor to undermine Ellison’s credibility. They characterized it as an “indirect form of witness intimidation through media channels.”
This argument successfully persuaded Judge Kaplan to order Bankman-Fried’s pre-trial detention.
Bankman-Fried is facing criminal charges over the alleged fraud of more than $1.8 billion he committed while at the helm of FTX. According to the prosecutors, the ex-billionaire defrauded regulators in “a house of cards” style, raising the fund from equity investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets.
Despite his bail requirements prohibiting him from speaking to the press, Bankman-Fried was notably talking to media outlets – denying any wrongdoing.
CNBC reported that various media representatives, including legal counsel for The New York Times and the Reporters Committee for Freedom of the Press, submitted letters contesting Bankman-Fried’s detention.
They raised concerns about freedom of speech.
In parallel, defense lawyers contended that Bankman-Fried was exercising his First Amendment rights and had not breached any conditions of his bail by talking to journalists.
Attorneys of the former FTX chief argued that if Bankman-Fried were to be detained, he would face challenges in adequately preparing for his trial. The challenges come from the extensive volume of discovery documents, which can only be accessed through a computer equipped with internet connectivity.