Sam Bankman-Fried, co-founder of FTX, may be sent to prison sooner than expected. After prosecutors argued that the controversial crypto trader had engaged in witness tampering, a US judge stated on Wednesday that he will consider imprisoning Bankman-Fried before the trial. During a hearing, prosecutors requested US District Judge Lewis Kaplan to detain the FTX CEO, claiming that he had ‘stepped a line’ by sharing his former partner Caroline Ellison’s personal writings with a reporter, a second instance of witness tampering.
Notably, Ellison is also the former CEO of FTX offshoot Alameda Research and has agreed to testify against Bankman-Fried as part of a deal for leniency after admitting to charges that carry a punishment of up to 110 years in prison. “This latest incident is an escalation of an ongoing campaign with the press that has now crossed a line,” said prosecutor Danielle Sassoon from the Manhattan US Attorney’s office, referring to the Ellison writings. “This isn’t a First Amendment issue.”
As a result, Judge Kaplan slapped a “gag order” restricting Bankman-Fried’s capacity to talk publicly and stated that he would consider prosecutors’ request to imprison the former billionaire until the trial begins in October of this year. “I’m very mindful of the government’s interest in this issue, which I take seriously. Mr. Bankman-Fried, you’d better take it seriously too,” said the judge.
Bankman-Fried pleaded not guilty to fraud charges in federal court in Manhattan in January, setting the groundwork for the October trial
Bankman-Fried pleaded not guilty to fraud charges in federal court in Manhattan in January, setting the groundwork for the October trial. Bankman-Fried was charged with eight counts relating to the failure of FTX and hedge fund Alameda Research. Wire fraud, money laundering, and campaign finance violations are among the accusations, with five having a maximum sentence of 20 years in jail. Bankman-Fried has been residing under severe supervision at his parents’ house in Palo Alto, California, after being deported from the Bahamas, where FTX was based, on a $250 million bail package.
Despite the fact that all evidence points to Bankman-Fried’s involvement in the fraud, the former crypto wunderkind maintains that he did not steal the monies. “I didn’t steal funds, and I certainly didn’t stash billions away. Nearly all of my assets were and still are utilizable to backstop FTX customers,” wrote Bankman-Fried in one of his blog posts.
In November of last year, FTX declared bankruptcy as traders rushed to take $6 billion from the market in just 72 hours. After rival exchange Binance’s rescue deal went through, the company’s fate was sealed. Bankman-Fried, according to the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), was the mastermind behind the theft of more than $8 billion from customer accounts.