NEW YORK (AP) — FTX founder Sam Bankman-Fried left a federal courtroom Friday in handcuffs after a judge revoked his bail after finding that the fallen cryptocurrency wiz had repeatedly tried to influence witnesses against him.
Bankman-Fried watched his hands as Judge Lewis A. Kaplan detailed why he believed the California man had repeatedly pushed the limits of his $250 million bail package to a point where Kaplan could no longer guarantee the protection of the community, including prosecutors testify, unless the 31-year-old was behind bars.
At the end of the hearing, Bankman-Fried took off his jacket and tie and gave his watch and other personal effects to his lawyers. The clink of handcuffs could be heard as his hands were cuffed in front of him. He was then led out of the courtroom by U.S. marshals.
It was a spectacular fall for a man once seen by many as a shrewd crypto visionary who had testified before Congress and hired celebrities including Larry David, Tom Brady and Stephen Curry to promote his companies.
Kaplan said there was probable reason to believe that since his December arrest, Bankman-Fried had attempted “at least twice to tamper with witnesses,” most recently by showing a journalist the private writings of an ex-girlfriend and star witness against him and in January when he contacted FTX’s general counsel with an encrypted communication.
The judge said he concluded there was a likelihood that Bankman-Fried had tried to influence both expected trial witnesses “and very likely others whose names we don’t even know” to get them “to withdraw, to cooperation with the government.”
Bankman-Fried’s lawyers insisted their client’s motives were innocent and that he should not go to jail for trying to protect his reputation from a barrage of unfavorable news reports.
Attorney Mark Cohen asked the judge to suspend his detention order for an immediate appeal, but Kaplan denied the request. Within an hour, defense attorneys had filed a notice of appeal.
Bankman-Fried has been under house arrest at his parents’ home in Palo Alto, California, since his extradition in December from the Bahamas on charges that he defrauded investors in his companies and illegally diverted millions of dollars in cryptocurrency from customers using his FTX stock exchange.
His bail package severely limited his internet and phone use.
The judge noted that the strict rules did not prevent him from contacting a top FTX attorney in January. possible, or at least go over things with each other.
At a hearing in February, Kaplan said the notice “suggests to me that he may have committed or attempted to commit a federal felony while on parole.”
On Friday, Kaplan said he rejected the defense’s claims that the communication was benign.
Instead, he said, it appears to be an invitation for FTX general counsel “to get together with Bankman-Fried” so that their memories are “on the same page.”
Two weeks ago, prosecutors surprised Bankman-Fried’s lawyers by demanding his incarceration, saying he broke those rules by showing The New York Times the private writings of Caroline Ellison, his ex-girlfriend and the ex-CEO of Alameda Research, a cryptocurrency trading hedge fund. that was one of his business.
Prosecutors alleged he attempted to tarnish her reputation and influence potential jurors who might be called for his October trial by sharing deep thoughts about her job and the romantic relationship she had with Bankman-Fried.
The judge said Friday that excerpts of Ellison’s communications that Bankman-Fried shared with a reporter were the kind of things that someone who had been in a relationship with someone “would be very unlikely to share with anyone other than The New York Times.” except to hurt, discredit and frighten the subject matter of the material.”
Ellison pleaded guilty in December to criminal charges carrying a possible 110-year prison sentence. She has agreed to testify against Bankman-Fried as part of a deal that could lead to a more lenient sentence.
Bankman-Fried’s lawyers argued that he probably failed to defend his reputation because the article cast Ellison in a sympathetic light. They also said prosecutors exaggerated Bankman-Fried’s role in the article.
They said prosecutors tried to incarcerate their client by presenting evidence consisting of “innuendo, speculation and few facts”.
Since prosecutors filed their arrest warrant, Kaplan had imposed a gag order barring public comments from people participating in the trial, including Bankman-Fried.
David McCraw, a lawyer for the Times, had written to the judge pointing out the First Amendment implications of a blanket ban, as well as the public interest in Ellison and her cryptocurrency trading firm.
Ellison confessed to playing a central role in an undetected scheme to defraud investors out of billions of dollars, McCraw said.
“It’s not surprising that the public would want to know more about who she is and what she did and that news organizations would try to provide the public with timely, relevant and honestly reported information about her, as The Times did in its story,” McCraw said.