U.S. DOJ Has 'Extremely Thin' Basis for Jailing FTX's Bankman-Fried Ahead of Trial: Defense

Prosecutors moved to revoke Sam Bankman-Fried's bond release, alleging his sharing Caroline Ellison's diary with the New York Times amounts to witness tampering.

AccessTimeIconAug 2, 2023 at 1:44 a.m. UTC
Updated Aug 2, 2023 at 3:22 p.m. UTC
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  • Sam Bankman-Fried has not tried to tamper with witnesses, and the U.S. Department of Justice's allegations that he had "mischaracterizes" the reality, a filing by the FTX founder's defense team said.
  • The ex-CEO of the crypto exchange faces potential jail time ahead of his trial later this year, if the DOJ wins its motion to revoke his bond.

Attorneys for Sam Bankman-Fried pushed back against the U.S. Department of Justice's (DOJ) motion to remand the FTX founder into custody in a court filing Tuesday, saying it relied on an "extremely thin" factual basis.

The DOJ has "jumped to conclusions" about Bankman-Fried's conduct, the filing said, which also pushed back against government arguments that he had pushed the boundaries of his bond release on multiple prior occasions.

"The Government is wrong. Its version of events mischaracterizes the facts and removes them from their proper context to cast Mr. Bankman-Fried’s actions and intentions in the most negative light possible," the filing said.

Prosecutors alleged that Bankman-Fried had shared former Alameda Research CEO Caroline Ellison's personal diary with the New York Times in an attempt to harass her and potentially tamper with her testimony as a potential witness in his criminal trial in October 2023.

During a hearing last week, Assistant U.S. Attorney Danielle Sassoon said the DOJ was seeking Bankman-Fried's detention, an argument her team reiterated in a written submission on Friday.

"The defendant’s leaking of Ellison’s private writings is yet another instance of the defendant trying to intimidate and corruptly persuade Ellison with respect to her upcoming trial testimony, as well as an effort to influence or prevent the testimony of other potential trial witnesses by creating the specter that their most intimate business is at risk of being reported in the press," the DOJ said in the filing.

The DOJ's argument did not show that Bankman-Fried was trying to intimidate Ellison, the defense filing said.

"The reporter contacted Mr. Bankman-Fried about an article he was already writing that featured Ms. Ellison’s personal diaries and writings. The reporter was already aware of these documents because he had written an article two months earlier in which he described Ms. Ellison’s writings and reported that they contained her 'raw reflections on SBF' and her 'personal and professional resentment' towards him," it said.

The DOJ had also pointed to Bankman-Fried's previous reach-out to FTX.US's general counsel, Ryne Miller, to "vet things with each other" as another example of alleged witness tampering.

In its response, Bankman-Fried's attorneys said that in reality, Miller had initiated the conversation with him, sharing a limited number of screenshots of Signal messages as evidence. The initial set of messages date back to Nov. 10, 2022 – prior to Bankman-Fried's arrest – and a second page of messages does not specify what date they were sent. A second exhibit shows Miller connecting Bankman-Fried with current FTX CEO John J. Ray III's team.

Another exhibit contains the actual message the government found fault with, which Bankman-Fried appears to have sent via both email and Signal.

Bankman-Fried's attorneys also argued that his use of a virtual private network – the use of which both the DOJ and the judge overseeing the case questioned – was innocuous, and that the DOJ had no evidence of wrongdoing.

The defense team further argued that locking Bankman-Fried up would deprive him of the ability to build a strong case, citing working conditions at the Metropolitan Detention Center in Brooklyn, where he may be held.

Bankman-Fried faces seven different charges, including securities and wire fraud allegations, facing a trial currently scheduled to kick off in October. Another trial, set for March, will see the DOJ try Bankman-Fried again on another five charges, including conspiracy to commit bank fraud. He was arrested in December and extradited to the U.S., where he was released on bond while subject to a strict set of bail conditions.

The DOJ also announced last week that it had dropped a campaign finance charge, citing treaty obligations.

UPDATE (Aug. 2, 2023, 02:00 UTC): Adds additional information from exhibits.


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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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