In a major blow to Sam Bankman-Fried, the founder of FTX, a judge has granted federal prosecutors’ request to revoke his bail due to alleged witness tampering. As a result, Bankman-Fried was immediately remanded to custody following a court hearing in New York. Despite Bankman-Fried’s plea for delayed detention pending an appeal, Judge Lewis Kaplan denied the request. Unless the appeal proves successful, Bankman-Fried will remain in custody until his criminal trial, scheduled to commence on October 2nd. Judge Kaplan stated during his ruling that there is probable cause to believe that the defendant attempted to tamper with witnesses on at least two occasions.
A Dramatic Courtroom Scene
The courtroom scene after the ruling was filled with tension and emotion. Court marshals escorted Bankman-Fried into custody as he removed his blazer, tie, emptied his pockets, and appeared to take off his shoes. Supported by his parents in the gallery, his mother expressed her distress by burying her face in her hands throughout Judge Kaplan’s lengthy ruling.
Choice of Detention Facility
The government requested that Bankman-Fried be sent to Putnam, New York, where a jail with internet access for defense preparation is located. The alternative would have been sending him to the Metropolitan Detention Center in Brooklyn, which offers limited internet access for prisoners. Bankman-Fried had been free on a $250 million bail package, residing at his parents’ home in Palo Alto, California since his arrest in December.
A History of Pre-Trial Hearings
Bankman-Fried’s court appearance on Friday adds to a series of pre-trial hearings that have been centered around his interactions with the press. The Justice Department refers to these exchanges as a “pattern of witness tampering and evading his bail conditions.” In July, Judge Kaplan sternly warned Bankman-Fried about his conversations with the media. Various members of the press, including representatives from The New York Times and the Reporters Committee for Freedom of the Press, objected to Bankman-Fried’s detention, citing concerns about free speech. Defense attorneys argued that Bankman-Fried’s first amendment rights were being exercised, and he had not violated any bail conditions by speaking with journalists.
The Defense’s Hopes for Discovery
Bankman-Fried’s defense team had hoped that the discovery process would strengthen his case. They claimed that without internet access, he would not be able to properly prepare for trial due to the vast amount of discovery documents that can only be accessed via a computer with internet connection.
The Prosecution’s Accusations
The government, in their motion requesting Bankman-Fried’s detention, revealed that he had sent over 100 emails to the media and made more than 1,000 phone calls to press members in recent months. The tipping point for prosecutors was when Bankman-Fried leaked private diary entries of his ex-girlfriend, Caroline Ellison, to the New York Times. Ellison, the former CEO of Bankman-Fried’s failed crypto hedge fund, Alameda Research, has been cooperating with the government since December and is expected to be a star witness for the prosecution. Judge Kaplan pointed out that Bankman-Fried’s actions were designed to “hurt” and “discredit” Ellison.
The Ruling: Jail Time and New Bail Conditions
During his 33-minute ruling, Judge Kaplan explained his rationale for finding probable cause of witness tampering, leading to the decision to remand Bankman-Fried to jail. As a result, the revised bail conditions now include restricted internet access and a ban on smartphone use. The prosecution presented evidence of Bankman-Fried’s numerous phone calls with one of the authors of the New York Times story before its publication, with some conversations lasting approximately 20 minutes. The prosecution argued that this was an attempt by Bankman-Fried to discredit Ellison, describing it as “indirect witness intimidation through the press.”
A Difficult Road Ahead
Sam Bankman-Fried’s journey has been fraught with challenges. The prosecution had to revise charges twice to comply with an extradition agreement made with The Bahamas, where Bankman-Fried was previously held in custody. In a letter to the judge, the government indicated its plan to file a new superseding indictment in the following week.
Sam Bankman-Fried’s bail revocation and subsequent remand to custody due to witness tampering allegations emphasize the seriousness of the charges against him. The decision by Judge Kaplan was based on substantial evidence presented by the prosecution, highlighting Bankman-Fried’s attempts to discredit a crucial witness. As the trial date approaches, Bankman-Fried must now navigate the challenges of pre-trial detention while his defense team adjusts to the new bail conditions. The outcome of this case will undoubtedly have significant implications for the future of FTX and the broader cryptocurrency industry.
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