Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, was taken into custody on Friday after a federal judge in New York revoked his bail. The judge accused him of trying to influence witnesses who are set to testify against him in a trial scheduled for October 2nd.
As Mr. Bankman-Fried was being handcuffed, his mother Barbara Fried attempted to approach him, though a court officer warned her to stand back. He was then taken to the Metropolitan Detention Center in Brooklyn.
Mr. Bankman-Fried’s lawyer, Mark Cohen, said that he would appeal the judge’s decision, though Judge Lewis A. Kaplan said he wouldn’t wait for the outcome before sending him to jail. This was the latest blow to the 31 year-old, who rose to prominence as an industry titan before being charged with fraud and facing decades in prison.
The court dispute over his bail stemmed from a New York Times article which detailed private writings by Caroline Ellison, an executive in Mr. Bankman-Fried’s business empire who had also dated him. Prosecutors alleged that the FTX founder had given the documents to The Times in an attempt to intimidate Ms. Ellison ahead of his trial.
A temporary gag order had also been imposed, preventing Mr. Bankman-Fried and his representatives from speaking to the media. Various parties submitted a court filing raising concerns about the gag order in relation to First Amendment rights.
In January, prosecutors presented evidence that Mr. Bankman-Fried had sent messages to a former FTX executive who could be a witness in the case, as well as using a virtual private network. In response, the judge ordered him to adhere to stricter bail conditions.
On Friday, Judge Kaplan said that he had concluded that the FTX founder’s communication with the media and attempt to contact a former FTX employee were intended to “intimidate or also to influence” witnesses in the case.
It is uncommon for bail to be revoked, but it does happen when judges are convinced that the defendant’s actions present a threat to the community or to witnesses. Erik Gordon, a law and business professor at the University of Michigan said that if a defendant is out on bail, they should not come close to attempting to influence a witness.
The Times’ article included excerpts from private Google documents addressed to Mr. Bankman-Fried regarding their relationship and her insecurities, which prosecutors argued was an attempt to discredit his former girlfriend.
For Judge Kaplan, this was the final straw. He said that Mr. Bankman-Fried’s messages to the former FTX executive had seemed designed to get him to “sing from the same hymnbook”, while his communication with The Times was an attempt to “portray Ms. Ellison in an unfavorable light.”
Mr. Bankman-Fried was arrested in the Bahamas, where FTX was based, after the company collapsed during a turbulent week in November. He has since been reprimanded repeatedly for behavior that prosecutors said pushed the boundaries of what he was allowed to do while awaiting trial.
The FTX founder will now have to prepare for his trial from a jail cell. His lawyers argued that conditions at the Brooklyn detention center would make it difficult for him to do so, though the judge said he was open to transferring him to a facility with more consistent internet access or allowing him to meet with his lawyers at their office, under heavy security.
For now, Mr. Bankman-Fried will be housed at the federal facility in Brooklyn. In court filings, his lawyers argued that the jail was facing a “staffing crisis” and that people held there typically had limited computer access.
