The US Department of Justice Wants to Send Sam Bankman-Fried to Prison
The US Department of Justice wants FTX founder Sam Bankman-Fried to spend the rest of his time in prison ahead of his criminal trial on the grounds that he made multiple attempts to tamper with witnesses.
Bankman-Fried appeared in federal court on Wednesday, accompanied by two attorneys, after the Justice Department claimed he shared documents with the New York Times to try to discredit former Alameda Research CEO Caroline Ellison, with whom he previously had a relationship.
Danielle Sassoon, a US Assistant Attorney, opened the hearing by stating that the Justice Department was seeking Bankman-Fried’s incarceration.
“The government believes that no set conditions of release can ensure the safety of the community,” she said. “…it seems undisputed that the defendant submitted the cited documents [in the New York Times] …for discrediting [Ellison].”
Bankman-Fried sent more than 100 emails to reporters and made more than 100 phone calls to a single Times reporter (who wrote the article in question), she said in court. The DOJ also believes the former crypto executive was the source of a previous article on Ellison. Prosecutors are also concerned about Bankman-Fried’s more than 500 phone calls to author Michael Lewis, who is about to publish a book on FTX before his criminal case begins.
Judge Lewis Kaplan of the Southern District of New York, while declining to send Bankman-Fried to jail immediately, set an expeditious timeline for filing formal written statements on the matter for both the prosecution and the defense. The DOJ has until Friday to submit their filings. The defense has until Tuesday to respond, and the DOJ has until August 3 to submit a final answer.
The judge appeared skeptical of defense attorney Mark Cohen’s arguments during the hearing.
Cohen, who said Bankman-Fried did not seek to discredit Ellison, argued that he did not attempt to contact reporters himself but had a strategy of responding to reporters in order to sway the media narrative about him. There have been over a million negative articles about Bankman-Fried, Cohen said.
“What we have here is a defendant who, given the many, many negative stories… given the literally thousands of stories about his relationship with Ms. Ellison… believes he had a right to make a fair comment,” Cohen said, adding that it might not be “the best strategy.”
Cohen also argued that sending Bankman-Fried to prison to organize his defense would become more difficult, citing the amount of documents accessible through online tools.
Sassoon said that a detection plan based on using these digital tools was “no way out of prison”.
Wednesday’s hearing wasn’t the first time the judge expressed concern about Bankman-Fried’s behavior during his sentence. At a previous hearing in February, he told the court he had “probable reason” to believe that Bankman-Fried’s previous communications with former FTX.US general counsel Ryne Miller may have amounted to witness tampering.
Judge Kaplan said Wednesday he “still believes[es] that the communications with Miller were intended to influence the testimony.”
“And now you hear about the extraordinarily intense contact between the defendant, journalists and the author of this report. Given these new facts, there is probably reason to believe [there’s enough reason to revoke bail],” he said.
The judge ended the hearing warning Bankman-Fried to take the matter seriously and signed an injunction barring Bankman-Fried from communicating with the press or making any other public statements, at least until Kaplan had an opportunity to review the written filings as to whether or not the FTX founder’s bail should be fully vacated.
Bankman-Fried is currently due to appear in court in October on various charges including securities and wire fraud allegations. A second trial on additional charges including bank fraud and bribery is scheduled for next March.
UPDATE (26 Jul 2023, 19:46 UTC): Added line about judge’s warning to Bankman-Fried.
UPDATE (July 26, 21:15 UTC): Adds detailed write-through throughout.
