The founder of FTX cryptocurrency exchange has been jailed after a judge revoked his bail.
At a hearing on Aug. 11 in Manhattan, U.S. District Judge Lewis Kaplan announced he had found probable cause that Bankman-Fried has tampered with witnesses on at least two occasions. He denied a request from the defense to delay their client’s detention pending an appeal.
Kaplan said the previously established gag order was not “a workable solution longer term particularly with someone who has shown a willingness and a desire to risk crossing the line in an effort to get right up to it no matter where the line is.”
Bankman-Fried has been charged with stealing billions of dollars from his customers to cover losses incurred by his hedge fund, Alameda Research. He was extradited from the Bahamas and arrested in December 2022. The 31-year-old has pleaded not guilty.
He had been out of jail on a $250 million bond and confined to his parent’s home in Palo Alto, California.
“His parents, both law professors at Stanford University, were present in the courtroom's audience,” reports Reuters. “His mother, Barbara Fried, nodded to him in tears as he left. His father, Joseph Bankman, placed his hand over his heart as he watched his son be led away.”
One of the conditions of his bail was that prosecutors were permitted to monitor Bankman-Fried’s internet and phone activity. According to the prosecution, Bankman-Fried showed the personal writings of his former girlfriend and Alameda Chief Executive Caroline Ellison to a reporter from The New York Times who visited his parents’ home.
The Times published an article on July 20 that contained excerpts from Ellison’s Google Documents diary.
“Both the New York Times and the Reporters Committee for Freedom of the Press advocated against jailing Bankman-Fried, filing letters that argued the detention would violate Bankman-Fried’s freedom of speech,” reports The Washington Post. “Bankman-Fried’s defense attorneys argued that he had a First Amendment right to repair his reputation, and cited that there was no gag order that prohibited him from talking to media.”
"Mr. Bankman-Fried’s contact with the New York Times reporter was not an attempt to intimidate Ms. Ellison or taint the jury pool," said one of the billionaire’s lawyers, per Yahoo! Finance. "It was a proper exercise of his rights to make fair comment on an article already in progress, for which the reporter already had alternate sources."
Ellison pleaded guilty to fraud charges and agreed to cooperate with the prosecution. She is expected to testify at trial. Two other former FTX executives, Zixiao “Gary” Wang and Nishad Singh, have also pleaded guilty to fraud charges and are working with the Department of Justice.
After his court appearance, Bankman-Fried was transported to a New York jail. His trial is set for Oct. 2.
