Federal Judge Orders Sam Bankman-Fried to Jail for Alleged Witness Tampering

Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, exits the Manhattan federal court in New York on Feb. 16, 2023. (Eduardo Munoz/Reuters)

A U.S. judge on Aug. 11 revoked Sam Bankman-Fried’s bail after finding probable cause that the founder of the FTX cryptocurrency exchange may have tampered with witnesses.

U.S. District Judge Lewis Kaplan announced the decision at a hearing in federal court in New York, less than two months before the scheduled October fraud trial. The judge rejected a defense request to delay Mr. Bankman-Fried’s detention pending an appeal of the bail revocation.

Since his arrest in December, Mr. Bankman-Fried has been out on a $250 million bail package that requires him to stay at his parents’ home in Palo Alto, California.

Federal prosecutors in Manhattan first made their request to jail the FTX founder at a court hearing in late July, saying that he shared former romantic partner Caroline Ellison’s personal writings with a New York Times reporter. By doing that, he “crossed a line,” they argued.

The 31-year-old has pleaded not guilty to stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research fund. Ms. Ellison had served as the chief executive of the hedge fund before the two companies collapsed last year.

Lawyers for Mr. Bankman-Fried said that prosecutors mischaracterized his intentions in handing Ms. Ellison’s writings to the NY Times, claiming that he was trying to defend his reputation.

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“In support of its theory that Mr. Bankman-Fried ’tampered' with witnesses, the Government proffers evidence that consists of innuendo, speculation, and scant facts,” his lawyers wrote, according to The Associated Press. “The Government’s showing is a far cry from the evidence presented in cases in this district where remand has been ordered in connection with alleged witness tampering, and in no way supports revocation of Mr. Bankman-Fried’s bail.”

But prosecutors said that despite revised bail conditions that included restricted smartphone and internet usage, he still tried to allegedly leak information to the press.

“Faced with a series of conditions meant to limit the defendant’s use of the internet and the phone, the defendant pivoted to in-person machinations,” prosecutors had argued last month (pdf).

“The defendant’s purpose in sharing these materials is plain,” prosecutors also wrote. “By selectively sharing certain private documents,” he allegedly tried to taint the upcoming jury pool and characterize Ms. Ellison as “a jilted lover who perpetrated these crimes alone.”

At a July 26 hearing, Mr. Kaplan had restricted Mr. Bankman-Fried from speaking publicly about his case and asked both sides to address whether jail was necessary. The gag order has drawn attention from news media, including the NY Times, which in an Aug. 2 letter to the judge said the measure should be loosened to restrict only comments that could interfere with a fair trial.

A July 20 article in the NY Times contained excerpts from Ms. Ellison’s personal Google documents before FTX’s collapse. She described being “unhappy and overwhelmed” with her job and feeling “hurt/rejected” from her personal breakup with Mr. Bankman-Fried.

The judge’s decision on Aug. 11 comes weeks after the federal government dropped a campaign finance violation charge against Mr. Bankman-Fried. In a July 26 letter to the judge, the U.S. Attorney’s Office in Manhattan stated that they wouldn’t pursue the charge of conspiracy to complete unlawful campaign contributions and said that they did not receive permission from the Bahamian government for that charge.

“The Government has been informed that The Bahamas notified the United States earlier today that The Bahamas did not intend to extradite the defendant on the campaign contributions count,” U.S. Attorney Damian Williams wrote in the letter. “Accordingly, in keeping with its treaty obligations to The Bahamas, the Government does not intend to proceed to trial on the campaign contributions count.”

Donations

It was previously reported that Mr. Bankman-Fried was a significant donor to the Democrat Party. In 2021 and 2022, he donated some $40 million to the Protect Our Future PAC, the Democratic National Committee, the Democratic Senate Campaign Committee, and the Democratic Congressional Campaign Committee.

He also donated to the campaigns of Sen. Kirsten Gillibrand (D-N.Y.), Sen. Cory Booker (D-N.J.), and Rep. Debbie Stabenow (D-Mich.), according to reports. Some $5 million also was contributed to President Joe Biden’s 2020 campaign.

Mr. Bankman-Fried confirmed in 2022 that he also made “dark” donations to GOP campaigns and causes. “All my Republican donations were dark,” Mr. Bankman-Fried said in an interview with cryptocurrency influencer and YouTuber Tiffany Fong. “The reason was not for regulatory reasons; it’s because reporters freak the [expletive] out if you donate to Republicans. They’re all super liberal, and I didn’t want to have that fight.”

Candidates he supported on the Republican side include Sen. John Boozman (R-Ark.), Sen. Lisa Murkowski (R-Alaska), and Sen. Susan Collins (R-Maine), he said.

In other interviews and on social media, Mr. Bankman-Fried has acknowledged inadequate risk management at FTX. However, he has denied stealing funds.

Reuters contributed to this report.