Sam Bankman-Fried’s bail has been revoked ahead of his October fraud trial after prosecutors accused the indicted founder of the bankrupt cryptocurrency exchange FTX of tampering with witnesses.
Bankman-Fried is expected to report to jail later on Friday after Judge Lewis Kaplan announced the decision at a hearing over Bankman-Fried’s bail conditions in federal court in Manhattan. Bankman-Fried was taken directly into custody at the conclusion of the hearing. He was led out of the courtroom by members of the US Marshals Service.
Federal prosecutors in Manhattan first made their surprise request to jail the former billionaire in a 26 July hearing, saying he “crossed a line” by sharing his former romantic partner Caroline Ellison’s personal writings with a New York Times reporter. They argued that such press was intended to discredit Ellison, who is expected to testify against him at his scheduled 2 October trial.
Bankman-Fried, 31, has pleaded not guilty to stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund, where Ellison was chief executive.
Ellison and two other former members of Bankman-Fried’s inner circle have pleaded guilty to fraud and agreed to cooperate with the US attorney’s office in Manhattan.
Bankman-Fried’s lawyers said prosecutors mischaracterized his intentions in sharing Ellison’s writings, arguing he wanted to defend his reputation and that he had a right to speak to the press.
Kaplan said he had concluded there was probable cause to believe Bankman-Fried had tried to “tamper with witnesses at least twice” since his December arrest. A defense lawyer said an appeal of the incarceration order would be filed and asked for an immediate stay of the order.
Bankman-Fried has been largely confined to his parents’ home in Palo Alto, California, on $250m bond since his December arrest after being extradited from the Bahamas, where FTX was headquartered. Prosecutors have requested the Bankman-Fried be sent to a jail in Putnam, New York as opposed to the nearest jail, in Brooklyn, so that the embattled founder will have better internet access for preparation of his defense, according to a report from CNBC.
In the 26 July hearing, Kaplan restricted Bankman-Fried from speaking publicly about his case, but asked both sides to submit written arguments on whether to detain him.
The decision has drawn attention from news media, who have raised freedom of press concerns surrounding the gag order. The New York Times in a 2 August letter to the judge said the measure should be loosened to only restrict comments that could interfere with a fair trial.
An article in the newspaper contained excerpts from Ellison’s personal Google documents prior to FTX’s collapse. She described being “unhappy and overwhelmed” with her job and feeling “hurt/rejected” from her personal breakup with Bankman-Fried.
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