BANKMAN-FRIED NEEDS TIGHTER BAIL RESTRICTIONS, JUDGE SAYS
Wants lawyers to ensure FTX founder did not delete text messages
A federal judge Thursday ordered lawyers for Sam BankmanFried, the disgraced founder of the bankrupt FTX cryptocurrency exchange, to create a plan with prosecutors that would ensure that Bankman-Fried did not delete text messages he sent while awaiting trial on charges that he orchestrated the theft of billions of dollars in customer deposits.
Judge Lewis Kaplan issued his instructions at a hearing in U.S. District Court in Manhattan, N.Y., two days after rejecting an agreement that federal prosecutors in Manhattan struck with BankmanFried’s lawyers to limit his ability to use certain encrypted messaging services such as Signal.
Kaplan said the proposal had done “nothing but spark more questions in my mind,” explaining that it did not fully eliminate the potential for Bankman-Fried to send messages he could later delete.
The back-and-forth in court arose from a dispute over the conditions of Bankman-Fried’s bail. Prosecutors sought additional conditions last month after presenting evidence in court filings that Bankman-Fried had sent messages over email and Signal to Ryne Miller, general counsel of the U.S. arm of FTX. In court filings, prosecutors said Miller, not identified by name, could be a potential witness against Bankman-Fried.
They asked the judge to stop Bankman-Fried from contacting former FTX employees and using Signal or other encrypted apps, arguing the technology might enable Bankman-Fried to secretly engage in witness tampering.
Bankman-Fried’s lawyers denied
he was trying to influence a witness.
But after Kaplan temporarily imposed the new restrictions, defense
lawyers reached an agreement with prosecutors to bar Bankman-Fried from using certain encrypted apps but explicitly permit him to engage in other forms of electronic communication.
At the hearing, Kaplan said he was not satisfied with the agreement, noting, “I am far less concerned about the defendant’s convenience.” He gave both parties until Tuesday to submit a new proposal and until Feb. 21 to make it final.
Once a high-flying crypto executive, Bankman-Fried, 30, was arrested in December on charges he used billions of dollars of FTX customer deposits to finance political contributions, lavish real estate purchases and trading operations at his hedge fund.
He has been living with his parents in Palo Alto after reaching a $250 million bail agreement late last year.
The terms of the bail package required Bankman-Fried to stay confined to his parents’ house and wear an electronic monitoring device on his ankle.