FTX’s Bankman-Fried Trades Penthouse for Jail as Judge Revokes Bail
BY PYMNTS | AUGUST 11, 2023
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It is official: orange is the new black for accused crypto criminal Sam Bankman-Fried.
This, as a federal Judge revoked the FTX co-founder’s bail and sent him packing off to jail Friday afternoon (Aug. 11), ending the ongoing back-and-forth between the one-time wunderkind and U.S. prosecutors over his behavior while awaiting criminal trial in October.
The reason? Witness tampering — particularly the sharing of private documents belonging to Caroline Ellison, Bankman-Fried’s former lover and CEO of Alameda Research, the hedge fund at the empty center of FTX’s multibillion-dollar collapse.
Those documents later showed up in a New York Times story on Ellison, which U.S. prosecutors allege was an attempt to intimidate her. The portions cherrypicked by the Gray Lady show Ellison at her lowest, both personally and professionally.
Ellison, for her part, has admitted her guilt to all seven of the fraud charges levied against her for the active role she is accused of knowingly playing in the disastrous FTX implosion.
She remains a key witness in Bankman-Fried’s upcoming trial.
“There is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice,” Judge Lewis A. Kaplan said during the hearing.
Danielle Sassoon, an Assistant U.S. Attorney for the Southern District of New York, told Kaplan that “the Defendant requested access to Google Drive, he said for discovery. Then he used it to give Ms. Ellison’s documents to the New York Times.”
“It’s enough for the court to conclude detention is appropriate if he’s unlikely to abide by his bail conditions. He is intent on interfering with the integrity of the trial,” Sassoon added.
“All things considered, I’m going to revoke bail,” Kaplan said.
Read More: Why Can’t Bankman-Fried Stop Talking?
Bankman-Fried Willing to Risk Crossing the Line
Bankman-Fried’s lawyer Mark Cohen admitted that his client shared some of Ellison’s diary pages with the New York Times but disputed the characterization of the act as witness tampering, instead arguing it was a freedom of speech issue.
“What if a journalist calls a defendant and asks, ‘what do you have to say?’” Cohen said.
The freedom of speech defense did not fly with Kaplan, who emphasized that crypto’s latest prince-to-pauper story showed a consistently willful pattern of behavior where Bankman-Fried was willing “to risk crossing the line in an effort to get right up to the line wherever it is.”
The judge rejected a defense request to delay Bankman-Fried’s detention pending an appeal of the bail revocation.
Bankman-Fried’s defense team also argued that revoking the 31-year-old’s bail would make it more difficult to prepare for his trial.
“I don’t think that the revocation is quite the insurmountable problem,” Kaplan said in response and noted he would allow for Bankman-Fried to spend time in his lawyers’ offices in advance of his Oct. 2 trial where he will face charges of wire fraud, commodities fraud, securities fraud, money laundering and related conspiracy charges.
Bankman-Fried faces a second criminal trial, penciled in for March of 2024, on additional charges, including campaign finance violations.
He is accused of stealing billions of dollars of customer funds from his cryptocurrency exchange and maintains his innocence.
Read More: How the Entangled CEOs of FTX and Alameda Took the Public for a Ride
Pretrial motions from both the prosecution and the defense are due before the court by Monday (Aug. 14).
Bankman-Fried’s defense team plans to appeal the bail revocation, alleging that jailing the accused crypto fraudster would violate his Sixth Amendment right by impeding his ability to prepare for trial.
It was not immediately clear where Bankman-Fried would be detained. U.S. Attorney Sassoon proposed at the hearing he be held at the Putnam County Correctional Facility rather than Brooklyn’s Metropolitan Detention Center.
It is also unclear whether he will be served vegan meals.
The one-time paper billionaire removed his shoelaces, jacket and tie, emptied his pockets, and was led out of the courtroom by members of the U.S. Marshals Service in handcuffs at the end of Friday’s court hearing. His parents were reportedly in attendance.
The Bankman-Fried saga has been one of the most stunning and rapid penthouse-to-jailhouse implosions in modern history, and the alleged theft of billions of dollars from millions of trusting customers will be the defining act of Bankman-Fried’s life.
