Sam Bankman-FriedThe founder of collapsed cryptocurrency exchange FTX was ordered to jail on Friday after a federal judge in New York revoked his bail, in a dramatic turn less than two months before the case was due to go to trial.
Mr Bankman-Fried, 31, was placed under house arrest at his parents’ home in Palo Alto, California, because he was arrested in december on allegations of fraud arising from the explosion of FTX. But at Friday’s hearing, Judge Lewis A. Kaplan of the Federal District Court in Manhattan said the arrangement must be ended, after prosecutors argued that Mr. Bankman-Fried had given the documents to the media to intimidate a witness in the case.
The decision was the latest extraordinary development in one of the most dramatic corporate implosions in recent memory. Before filing for bankruptcy following a drop in deposits last fall, FTX rocketed the cryptocurrency market to become one of the leading companies in the industry. In a matter of weeks, Mr. Bankman-Fried went from industrialist, favorite of politicians and celebrities, to criminal defendant jailed for decades.
Now he has to prepare for the trial from the jail cell. The courtroom dispute centered on his bail An article in the New York Times was published last month detailing the private writings of Carolyn Ellison, an executive in Mr Bankman-Fried’s business empire who also dated him. Ms Ellison has pleaded guilty to fraud charges and has agreed to cooperate with prosecutors investigating Mr Bankman-Fried.
In court filings, prosecutors said Mr Bankman-Fried had given the documents to The Times to intimidate Ms Ellison by showing them negatively ahead of her trial in October. He also noted that Mr. Bankman-Fried has had several conversations with other journalists, including author Michael Lewis, who is writing a book about FTX that is set for publication in the week the trial begins.
Before seeking to revoke Mr Bankman-Fried’s bail, prosecutors also asked Judge Kaplan to impose a gag order preventing the FTX founder from speaking to the media ahead of his trial.
Mr Bankman-Fried’s lawyers said when he gave the documents to The Times, he was exercising his rights to respond to “enquiries from the media” and had not breached his bail conditions. The Times, the Reporters Committee for Freedom of the Press and a documentary film maker about Mr. Bankman-Fried presented court filings raising First Amendment concerns about the gag order.
Mr Bankman-Fried was arrested in the Bahamas, where FTX was based, after the company imploded during a turbulent week in November. He was extradited to the United States and released on highly restrictive bail conditions, requiring him to wear an ankle monitor and be confined to his parents’ home.
Since his release, Mr Bankman-Fried has been repeatedly reprimanded for his behaviour, which prosecutors said pushed the limits of what he was allowed to do while awaiting trial.
In January court filings, prosecutors presented evidence Mr. Bankman-Fried sent the message to a former FTX executive who may be a witness in the case. They also said that Mr Bankman-Fried had used a virtual private network, or VPN, to access the internet.
At that time, Judge Kaplan ordered Mr. Bankman-Fried to submit to strict bail requirements, restricting which websites he could access and preventing him from communicating with former FTX employees. Visitors to his parents’ home were prohibited from bringing phones or computers inside.
The Times article about Ms Ellison included excerpts from private Google documents addressed to Mr Bankman-Fried. At a court hearing on 26 July, prosecutors argued that the article showed Mr Bankman-Fried was trying to intimidate and discredit a key government witness.
Danielle Sassoon, one of the prosecutors, said at the hearing, “No condition of release can assure the safety of the community.” “Defendant has now shown that he intends to take advantage of the conditions of release and to improperly influence this trial.”
Santol Nerkar Contributed reporting.