FTX Founder Sam Bankman-Fried incarcerated as bail is revoked

FTX founder Sam Bankman-Fried (pictured above), has been incarcerated after a federal judge determined that there is substantial evidence of his involvement in tampering with witnesses on two separate occasions. This occurred while he awaited trial on charges related to fraud, after the  collapse of a major cryptocurrency exchange.

Misappropriated billions at his cryptocurrency exchange

Federal Judge Lewis Kaplan, following a hearing at Manhattan federal court on Friday, issued a concise written order stating that the court found “no condition or combination of conditions of release that will assure that the defendant will not pose a danger to other persons or the safety of the community.”

Prosecutors formally requested that Judge Kaplan revoke Bankman-Fried’s bail. This plea came after The New York Times published excerpts from the personal diaries of Caroline Ellison, former head of the affiliated hedge fund Alameda Research associated with the cryptocurrency exchange. Ellison has pleaded guilty to criminal charges and is now cooperating with the prosecution. She also confirmed that she and Bankman-Fried were in a romantic relationship.

Intended to intimidate Caroline Ellison

Bankman-Fried was subsequently identified by prosecutors as the individual responsible for providing the material to The New York Times. This content covered a period during which he was romantically involved with Ellison. Judge Kaplan remarked that the diary entries were of a personal nature that “someone who is in a relationship would be unlikely to share with anybody, still less The New York Times, except… to frighten” the author.

This incident follows a series of complaints from prosecutors concerning Bankman-Fried’s behaviour while awaiting the scheduled trial in October. The FTX founder faces allegations of misappropriating billions of dollars deposited by customers into his cryptocurrency exchange.

Tampered with witness evidence

In a separate instance, which drew severe criticism from prosecutors, Bankman-Fried reached out to a former colleague who stands as a potential witness in the ongoing case. In messages cited within court filings, Bankman-Fried expressed a desire to establish a “constructive relationship” and collaborate as resources. Judge Kaplan noted during Friday’s hearing that this message likely aimed to ensure that both men presented a unified front during the proceedings.

Bankman-Fried’s arrest took place in the Bahamas in December, subsequent to which he agreed to extradition to the United States to confront multiple criminal charges stemming from the collapse of FTX. He has pleaded not guilty.

Previously granted a $250 million bond, partly secured by his parents’ residence in California. Bankman-Fried’s release was subject to conditions such as wearing an ankle bracelet and remaining at his parents’ home.

Used a virtual private network while on bail

Prosecutors, however, accused him of evading certain stipulations, including using a virtual private network that hindered monitoring of his online activities. Bankman-Fried’s explanation for this action was his attempt to watch a football match.

During the bail hearing on Friday, Bankman-Fried’s parents were present in the courtroom. His mother, Barbara Fried, a law professor at Stanford University, reacted with visible distress as Judge Kaplan detailed how her son had shared Ellison’s diaries with a reporter at their Palo Alto home rather than utilizing a messaging application that would have left a digital trail.

A representative for Bankman-Fried announced intentions to appeal the decision to revoke his bail. However, Judge Kaplan ordered his immediate detention, expressing doubt about the likelihood of overturning the ruling.

As the scene unfolded, Bankman-Fried hastily removed his tie as US court marshals approached him with handcuffs. Despite attempts by his mother to approach him, she was escorted away from the courtroom.

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