Sam Bankman-Fried, the founder of the beleaguered cryptocurrency exchange FTX, found himself headed to a jail cell in Manhattan on Friday. This comes after U.S. District Judge Lewis Kaplan revoked his bail due to accusations of witness tampering filed by federal prosecutors.
Judge Kaplan’s decision fueled the escalating drama that has enveloped one of history’s largest financial fraud cases. Bankman-Fried, colloquially known as SBF, is set to next appear in court on October 2, answering to charges that he stole billions from FTX customers to remedy losses at his co-founded Alameda Research hedge fund.
🚨BREAKING: Sam Bankman Fried is going to jail until his trial in October for witness tampering
Judge revoked his $250M bail for “attempting to tamper with witnesses at least twice”https://t.co/TS9hQMJlNR
— DC_Draino (@DC_Draino) August 11, 2023
During Friday’s hearing, accusations flew that the former FTX CEO attempted to “intimidate witnesses and taint the jury pool,” primarily by leaking private diary entries of his ex-girlfriend, Caroline Ellison, to The New York Times. Judge Kaplan stated in his ruling, “There is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice.”
Once at the helm of Alameda Research, Ellison has already pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, commodities fraud, securities fraud, and conspiracy to commit money laundering. With her conviction sealed, the former hedge fund head is slated to take the stand against Bankman-Fried as part of her plea agreement, potentially delivering devastating testimony.
After being arrested, SBF was confined to house arrest in his parent’s Palo Alto residence after posting a staggering $250 million bond. However, the prosecution’s claims that SBF leaked Ellison’s diaries to “portray a key cooperator testifying against him in a poor inculpatory light” seemingly served as the breaking point for Kaplan. The prosecution also claimed that SBF was in contact with more than 1,000 journalists, which they argue violated his bail terms.
Bankman-Fried’s defense centered their arguments around the protection of free speech. Not only did his attorneys argue against his detention on First Amendment grounds, but the Reporters Committee for Freedom of the Press and The New York Times entered the fray, warning of potential free speech repercussions if the former crypto tycoon was jailed. They argued that Bankman-Fried’s conversations with the media were protected and didn’t breach his bail conditions.
The defense arguments failed to convince Kaplan to allow SBF to remain free on bail. The gravity of the charges against SBF and allegations of witness tampering seemed too much for the judge to overlook.
SBF’s legal team has indicated they will appeal the decision. But for now, the embattled crypto magnate will be preparing for his trial from behind bars, a far cry from his once high-flying status in the crypto realm.