NEW YORK -- NEW YORK (AP) — Sam Bankman-Fried should be immediately jailed, a prosecutor told a federal judge on Wednesday, saying the FTX founder violated his bail conditions by sharing information with a reporter designed to harass a key witness against him.
Judge Lewis A. Kaplan didn't immediately decide whether to put the cryptocurrency entrepreneur behind bars, instead giving his lawyers and prosecutors several days to submit written arguments and more information.
“I am certainly very mindful of his First Amendment rights, and I am very mindful of the government's interest here, which I take very seriously,” Kaplan said. “And I say to the defendant, Mr. Bankman-Fried: You better take it seriously, too.”
Prosecutors have concluded there's no set of bail conditions that would ensure Bankman-Fried wouldn't try to tamper with or influence witnesses, Assistant U.S. Attorney Danielle Sassoon said.
She said Bankman-Fried should be jailed because he shared personal writings about Caroline Ellison, who was the CEO of Alameda Research, a cryptocurrency hedge fund trading firm that was an offshoot of FTX.
Bankman-Fried is scheduled for trial Oct. 2 in Manhattan on charges that he cheated investors and looted FTX customer deposits. Bankman-Fried has been free on $250 million since his December extradition from the Bahamas, required to remain at his parents' home in Palo Alto, California. His electronic communications have been severely limited.
Bankman-Fried, 31, has pleaded not guilty to the charges. His lawyer, Mark Cohen, told Kaplan that prosecutors notified him only a minute before the hearing started that they planned to ask for his client's incarceration.
Cohen said his client should not be punished for trying to protect his reputation in the best way he can.
FTX entered bankruptcy in November when the global exchange ran out of money after the equivalent of a bank run.
Ellison pleaded guilty in December to criminal charges that carry a potential penalty of 110 years in prison. She has agreed to testify against Bankman-Fried as part of a deal that could result in leniency.
The prosecutor's request comes after the government said last week that Bankman-Fried gave some of Ellison’s personal correspondence to The New York Times. This had the effect of harassing her, prosecutors said, and seemed designed to deter other potential trial witnesses from testifying.
Earlier this year, Kaplan had suggested that jailing Bankman-Fried was possible after prosecutors complained that he found ways to get around limits placed on his electronic communications as part of a $250 million personal recognizance bond issued after his December arrest that requires him to live with his parents in Palo Alto, California.
In February, prosecutors said he might have tried to influence a witness when he sent an encrypted message in January over a texting app to a top FTX lawyer, saying he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”
At a February hearing, the judge said prosecutors described things Bankman-Fried had done after his arrest “that suggests to me that maybe he has committed or attempted to commit a federal felony while on release.”
