FTX’s Bankman-Fried Should Be Jailed Heading Into Trial, U.S. Argues

A prosecutor said that "no set of release conditions can secure the safety of the community."

AccessTimeIconJul 26, 2023 at 7:38 p.m. UTC
Updated Jul 31, 2023 at 7:07 p.m. UTC

The U.S. Department of Justice wants FTX founder Sam Bankman-Fried to spend the remainder of his time before his criminal trial in jail, alleging he has tried multiple times to tamper with witnesses.

Bankman-Fried, flanked by two attorneys, appeared in federal court Wednesday, after the DOJ alleged he shared documents with the New York Times to try and discredit former Alameda Research CEO Caroline Ellison, with whom he'd previously been in a relationship with.

Danielle Sassoon, an assistant U.S. attorney, opened the hearing by saying the DOJ was seeking Bankman-Fried's detention.

"It is the government's view that no set of release conditions can secure the safety of the community," she said. "... it appears to be undisputed the defendant provided the documents quoted [in the New York Times] ... to discredit [Ellison]."

Bankman-Fried has sent more than 100 emails to reporters and had more than 100 phone calls with a single Times reporter (who authored the article in question), she said in court. The DOJ also believes the onetime crypto executive was the source of a previous article about Ellison. The prosecution is also concerned about Bankman-Fried's more than 500 phone calls with author Michael Lewis, who is set to publish a book on FTX near the start of his criminal trial.

While Judge Lewis Kaplan, of the Southern District of New York, declined to jail Bankman-Fried immediately, he set out a rapid schedule for both the prosecution and the defense to make formal written submissions on the matter. The DOJ has until Friday to file theirs. The defense can respond until Tuesday, and the DOJ can file a final response by Aug. 3.

The judge appeared skeptical of the defense attorney Mark Cohen's arguments during the hearing.

Cohen, who said Bankman-Fried was not trying to discredit Ellison, argued that he had not tried to contact reporters himself, but did have a strategy to respond to reporters in an effort to influence the media narrative about him. There have been over a million negative articles about Bankman-Fried, Cohen said.

"What we have here is a defendant who believes, given the many, many negative stories ... given the literally thousands of stories about his relationship with Ms. Ellison ... that he had the right to make fair comment," Cohen said, adding that it may not be "the best strategy."

Cohen also argued that remanding Bankman-Fried to jail would make it more difficult to organize his defense, pointing to the volume of documents that are accessible through online tools.

Sassoon said that having a discovery schedule predicated on using these digital tools was "not a get out of jail" card.

Wednesday's hearing was not the first time the judge expressed concern about Bankman-Fried's conduct while out on bond. During a previous hearing in February, he told the court he had "probable cause" to believe that Bankman-Fried's previous communications with former FTX.US general counsel Ryne Miller may have amounted to witness tampering.

Judge Kaplan said Wednesday that he "still do[es] think" that the communication with Miller was intended to influence testimony.

"And now you hear of the extraordinary amount of contact between the defendant, journalists and the author of this report. In light of these new facts, there's probable cause to believe [there's enough reason to revoke bail]," he said.

The judge ended the hearing by warning Bankman-Fried to take the matters seriously, signing off on an interim gag order banning Bankman-Fried from communicating with press or making other public statements at least until Kaplan has had a chance to review the written submissions on whether or not the FTX founder's bail should be revoked entirely.

Bankman-Fried is currently set to go on trial in October on various charges, including securities and wire fraud allegations. A second trial on additional charges, including bank fraud and bribery allegations, is scheduled for next March.

UPDATE (July 26, 2023,19:46 UTC): Added line about judge's warning to Bankman-Fried.

UPDATE (July 26, 21:15 UTC): Adds detailed write-through throughout.

Edited by Nelson Wang.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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