Will Sam Bankman-Fried Go to Jail?
Federal prosecutors have said they “request the incarceration of Sam Bankman Fried” and have asked a judge to revoke the bond he held after turning over documents to the New York Times they allege they were intended to harass a colleague in senior management at FTX Empire and may influence their testimony.
“Amazingly Stupid”
The Narrative
Sam Bankman Fried, FTX’s former CEO and founder of the company, appeared in court Monday. Prosecutors claimed he “crossed a line” by leaking Caroline Ellison’s private diary to the New York Times. The US Department of Justice has a simple request: it wants Bankman Fried to remain behind bars until his trial begins on October 2nd.
Why It Matters
We are closely following Bankman Fried’s journey in the US justice system. He now lives with his parents after being released on bail. Prosecutors say he abused his privilege and must be held pending trial. However, his defense team claims he is entitled to First Amendment rights to defend himself and respond to journalists.
Breakdown
Last week, prosecutors told a federal court that they wanted Bankman-Fried “incarcerated.” The defense objected to the DOJ’s action, arguing that they had not been informed. Judge Lewis Kaplan of the US District Court of New York for the Southern District of New York then set a deadline for both parties to submit written motions.
The question is: will SBF be sent to prison before his trial?
The prosecutors hope so. The Justice Department sent a letter Friday saying Bankman-Fried had twice attempted to interfere with the testimony. He said he attempted to manipulate FTX.US’ General Counsel in January before “crossing a line” this month by sharing Ellison’s diary with the Times.
Mark Cohen, an attorney for Bankman-Fried, stated that Bankman-Fried merely exercised his First Amendment rights to defend his own reputation. He added that “millions” of negative articles have been written about him and “thousands of articles” about his relationship with Ellison.
In a filing filed Tuesday, he said the Justice Department had ”misrepresented” Bankman-Fried’s alleged witness abuse and taken facts out of context to disparage him.
We spoke to an attorney experienced in white-collar litigation. The attorney asked for anonymity so that he could speak honestly about the case.
The lawyer explained that the difficulty is “what is manipulation.” “I would look at the evidence they are using and see if that is possible.”
The lawyer also said that he expect a second hearing on this subject. He indicated that Bankman Fried could appeal the revocation or moratorium on his bail.
Orlando Cosme is the Managing Partner and Founder of OC Advisory. He said judges have wide discretion when dealing with issues like bond revocations.
“In general, people are allowed to speak freely about what is called protected speech.” He said that witness intimidation is not protected speech.
Ken White, founding member of Brown White and Osborn LLP, told AskFX that the judge would not like a defendant trying to influence or avenge a witness.
The question is whether the judge sees this as an attempt to harass or influence a witness, contrary to what his attorney says. [he’s just] White explained that he “put his story on the table and countered media narratives about how awful he was.”
He cited Bankman-Fried’s decision to speak to journalists and authors before the trial as “amazingly stupid.”
He said: “He doesn’t understand what’s good and what’s not.”
The DOJ must be able to convince the judge that Bankman-Fried would continue to harass and intimidate witnesses or otherwise violate court orders in order to win their motion, White said. ( *) Prosecutors have until tomorrow to respond to the defense filing
Another criticism is that the DOJ has announced that it would drop one of the proceedings Eight campaign finance lawsuits have been filed based on contractual obligations with the Bahamas .
The announcement prompted many prominent figures to claim that there was a conspiracy by elite politicians to protect Bankman-Fried.
A fair amount of ink has been spilled to call this conspiracy theory dumb, but it’s certainly worth spilling a little more to make sure things like this don’t detract from what is going on for weeks process, beginning in early October, over which AskFX will cover each report step along the way.
Cosme – who once did an internship at the US Attorney’s Office for the Eastern District of New York - said prosecutors are not the type to bow to political games.
Although there are occasional arguments between prosecutors and political appointees in their offices, professional prosecutors usually step back when there are serious differences of opinion when they feel uncomfortable, he said.
White said that the campaign finance charge does not constitute a potential violation of an extradition treaty, given all the other charges Bankman-Fried has yet to face.
“People said… ‘Well, you know, the government keeps breaking various treaties, why don’t they just tell the Bahamas to throw sand?’ And the reason is because there’s absolutely no reason for it,” White said. “He is accused of billions of dollars in fraud. The benchmarks are basically an imaginary number, and the allegations of campaign finance fraud are tiny by comparison, carrying no marginal additional weight. So it’s like the government.” I won’t worry if they can’t prosecute a speeding ticket while charging a speeding ticket with murder.
Legislation Moves Forward
Last week, the House Financial Services and Agriculture Committees held three bills, debated and ultimately voted to move forward five cryptocurrency-related bills: the Financial Innovation Technology for the 21st Century Act and the Blockchain Regulatory Clarity Act Act, the Keep Your Coins Act, the Financial Technology Protection Act and the Clarity for Payment Stablecoins Act of 2023.
The question now is whether any of these bills will go into effect. Jesse Hamilton has delved deeply into the trials they face — and some of the issues they must overcome — but for those of you who don’t spend your days dealing with the Legislative Department of the platform formerly known as Twitter deal, here’s what’s likely to happen next:
The House of Representatives is on recess until August. Now that lawmakers have resumed their work, their immediate focus could be on the government’s funding laws. In theory, they could link one of the crypto laws to a “must pass” law like government funding. If the House of Representatives votes to submit one or more crypto bills to the Senate, the obvious question is whether the Senate will pass it or whether they will pass it.
So far the answer doesn’t seem to be yes. The Senate Banking Committee has not indicated that it will pass crypto-specific legislation, much less the Senate as a whole. And considering House Financial Services Committee Chairman Patrick McHenry (RN.C.)’s claim that the White House has ended negotiations on the only bill widely believed to have bipartisan support — the stablecoin bill — it certainly doesn’t look like a president Joe Biden won’t sign a crypto law just yet.
The Senate added an anti-money laundering provision to the National Defense Authorization Act, which was approved by Sens. Kirsten Gillibrand (RN.Y.), Cynthia Lummis (R-Wyo.), Elizabeth Warren (D-Mass.) was sponsored .) and Roger Marshall (R-Kansas), who is now going to the House of Representatives.
But two court decisions in recent weeks may bolster the industry’s view that more legislative guidance is needed.
US District Judge Analisa Torres of the Southern District of New York ruled earlier this month that Ripple did not violate federal securities laws by programmatically selling XRP to retail customers. District Judge Jed Rakoff of the same court took a different view on whether such sales might violate federal securities laws when denying Terraform Labs’ motion to dismiss an SEC lawsuit.
There are important differences between the rulings – the Ripple ruling came after about two years of legal back-and-forth, the Terraform ruling is based on a preliminary application, etc. However, the contradiction should reinforce the industry’s position At this point, the law is simple not clear enough to know if securities laws apply to specific types of token sales.
Anyway: Your step, Congress.
