NEW YORK: A USjudge on Friday (Aug 11) revoked Sam Bankman-Fried’s bail, after finding probable cause that the indicted founder of the bankrupt FTX cryptocurrency exchange tampered with witnesses at least twice.
US District Judge Lewis Kaplan announced the decision at a hearing in federal court in Manhattan, less than two months before the scheduled October fraud trial.
He rejected a defense request to delay Bankman-Fried’s detention pending appeal of the bail revocation.
The decision could complicate Bankman-Fried’s efforts to prepare for trial, where the 31-year-old former billionaire faces charges of having stolen billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund.
Bankman-Fried has pleaded not guilty.
He had a blank expression as he was led out of the courtroom by members of the US Marshals Service in handcuffs after removing his shoelaces, jacket and tie and emptying his pockets.
His parents, both law professors at Stanford University, were present in the courtroom’s audience. His mother, Barbara Fried, nodded to him in tears as he left. His father, Joseph Bankman, placed his hand over his heart as he watched his son be led away.
Bankman-Fried has been largely confined to his parents’ Palo Alto, California, home on US$250 million bond since his December 2022 arrest.
Federal prosecutors in Manhattan first made their surprise request to jail Bankman-Fried last month, saying he “crossed a line” by sharing former romantic partner and Alameda Chief Executive Caroline Ellison’s personal writings with a New York Times reporter.
Ellison and two other former members of Bankman-Fried’s inner circle have pleaded guilty to fraud and agreed to cooperate with the US Attorney’s Office in Manhattan. She is expected to testify against him at his scheduled Oct 2 trial.
As part of his bail conditions, prosecutors had been able to monitor his telephone and internet activity. Kaplan said he was concerned that Bankman-Fried showed the writings to the reporter during an in-person meeting at his parents’ home.
“It was a way, in his view, of doing this in a manner in which he was least likely to be caught. He was covering his tracks,” said Kaplan, who is known for his no-nonsense demeanor in the courtroom and has also recently overseen defamation lawsuits against former US President Donald Trump and a sexual abuse lawsuit against Britain’s Prince Andrew.
Bankman-Fried sat with his shoulders hunched, leaning forward on the table and fidgeting with a Post-It note as he heard the judge order him detained.
His lawyer Mark Cohen argued prosecutors mischaracterised his intentions in sharing Ellison’s writings, saying Bankman-Fried wanted to defend his reputation and that he had a right under the US Constitution’s First Amendment to speak to the press.
“The defendant fairly believed he could make those comments,” Cohen said.
GAG ORDER ALREADY IN PLACE
At a Jul 26 hearing, Kaplan had restricted Bankman-Fried from speaking publicly about his case, and asked both sides to address whether jail was necessary.
The gag order has drawn attention from news media, including the Times, which in an Aug 2 letter to the judge said the measure should be loosened to only restrict comments that could interfere with a fair trial.
A Jul 20 article in the newspaper contained excerpts from Ellison’s personal Google documents prior to FTX’s collapse.
She described being “unhappy and overwhelmed” with her job and feeling “hurt/rejected” from her personal breakup with Bankman-Fried.
It was not immediately clear where Bankman-Fried would be held. Many defendants awaiting trial in New York City are held at Brooklyn’s Metropolitan Detention Center, which has been plagued by persistent staffing shortages, power outages and reports of maggots appearing in inmates’ food.
Danielle Sassoon, a prosecutor, proposed at the hearing that Bankman-Fried instead be held at the Putnam County Correctional Facility, a medium-security jail about 88km north of Manhattan which holds about 68 inmates.
Sassoon said the defendant would be able to access an internet-enabled laptop there to review evidence to prepare for trial.