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(AP) (KRON) — FTX founder Sam Bankman-Fried was sent to a New York jail Friday to await trial after a bail hearing for the fallen cryptocurrency wiz left a judge convinced that he had tried to influence witnesses against him.
U.S. District Judge Lewis A. Kaplan ordered Bankman-Fried’s bail revoked after prosecutors said he tried to harass a key witness in his fraud case. He was escorted out of the courtroom in handcuffs.
Bankman-Fried, 31, had been under house arrest at his parents’ home in Palo Alto, California, since his December extradition from the Bahamas. Bankman-Fried is charged with defrauding investors in his businesses and illegally diverting millions of dollars’ worth of cryptocurrency from customers using his FTX exchange.
Last month he showed a journalist his ex-girlfriend’s private writings, prosecutors said. Bankman-Fried’s lawyers insisted he shouldn’t be jailed for trying to protect his reputation against a barrage of unfavorable news stories.
Judge 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.
Judge Kaplan explained at length why he believed the California man had repeatedly pushed the boundaries of his $250 million bail package to a point that Kaplan could no longer ensure the protection of the community, including prosecutors’ witnesses.
Two weeks ago, prosecutors surprised Bankman-Fried’s attorneys by demanding his incarceration, saying he violated those rules by giving The New York Times the private writings of Caroline Ellison, his former girlfriend and the ex-CEO of Alameda Research, a cryptocurrency trading hedge fund that was one of his businesses.
Prosecutors maintained he was trying to sully her reputation and influence prospective jurors who might be summoned for his October trial. Ellison, 28, graduated from Stanford University before she had an “unsteady romantic relationship, with multiple breakups and reconciliations” with Bankman-Fried, the Times reported.
Ellison pleaded guilty in December to criminal charges carrying a potential penalty of 110 years in prison. She has agreed to testify against Bankman-Fried as part of a deal that could lead to a more lenient sentence.
Bankman-Fried’s lawyers argued he probably failed in a quest to defend his reputation because the article cast Ellison in a sympathetic light. They also said prosecutors exaggerated the role Bankman-Fried had in the article.
They said prosecutors were trying to get their client locked up by offering evidence consisting of “innuendo, speculation, and scant facts.”
Since prosecutors made their detention request, Kaplan has imposed a gag order barring public comments by people participating in the trial, including Bankman-Fried.
David McCraw, a lawyer for the Times, had written to the judge, noting the First Amendment implications of any blanket gag order, as well as public interest in Ellison and her cryptocurrency trading firm.
Ellison confessed to a central role in a scheme defrauding investors of billions of dollars that went undetected, McGraw said.
“It is not surprising that the public wants to know more about who she is and what she did and that news organizations would seek to provide to the public timely, pertinent, and fairly reported information about her, as The Times did in its story,” McGraw said.
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