Judge Sends FTX’s Sam Bankman-Fried to Jail Ahead of Fraud Trial

Bankman-Fried handed personal effects to his lawyers before U.S. Marshals handcuffed him
1 month before August 11, 2023 at 16:19 Author: Editors Desk Source: WSJ:
Sam Bankman-Fried, founder of collapsed crypto exchange FTX, arriving for a bail hearing at federal court in Manhattan on Friday. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
Sam Bankman-Fried, founder of collapsed crypto exchange FTX, arriving for a bail hearing at federal court in Manhattan on Friday. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES

A federal judge revoked FTX founder Sam Bankman-Fried’s bail and sent him to jail Friday, ending a monthslong battle between the Justice Department and the onetime crypto entrepreneur over his behavior while awaiting trial on fraud charges.

U.S. District Judge Lewis Kaplan said at a hearing in New York that Bankman-Fried pushed the limits of his bail conditions repeatedly.

“There is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice,” Kaplan said. The judge said he would allow Bankman-Fried’s lawyers to request that the defendant be allowed to spend time in his lawyers’ offices to prepare for his October trial.

A lawyer for Bankman-Fried said he intended to appeal the order.

After the judge concluded the hearing, Bankman-Fried handed his blazer, tie and shoelaces to his lawyers and then was handcuffed by U.S. Marshals. Bankman-Fried’s mother held her head and cried at times at the end of the hearing. She tried to approach her son in the courtroom but Marshals stopped her.

Bankman-Fried had been under home detention in his parents’ California house since the Manhattan U.S. attorney’s office charged him with stealing billions of dollars from his crypto exchange’s customers while defrauding lenders and investors. His trial, on seven criminal counts related to the crypto exchange’s collapse, is scheduled to begin Oct. 2.

Federal prosecutors in New York had asked the judge to jail Bankman-Fried after they said he attempted to tamper with witnesses and provided a New York Times reporter who visited his home with private writings of Caroline Ellison, his ex-girlfriend and former chief executive of his crypto-trading firm Alameda Research. The Times used the writings in a profile of Ellison, who is expected to testify against Bankman-Fried at trial.

“Faced with a series of conditions meant to limit the defendant’s use of the internet and the phone, the defendant pivoted to in-person machinations,” prosecutors wrote in a letter earlier this month.

Lawyers for Bankman-Fried have acknowledged that he has spoken to reporters and provided information for the Times’ story but they said he did so to protect his reputation. His case has drawn widespread media attention, they said, and their client was exercising his First Amendment right to combat negative portrayals of himself.

Jailing Bankman-Fried, his lawyers have said, would impede his ability to prepare for trial, violating his Sixth Amendment right. The onetime crypto entrepreneur currently spends his days reviewing pertinent documents while sharing his analysis with his legal team by phone, email and Zoom, they said. Jail would greatly limit access to records and the internet, they said.

Kaplan said at the hearing that he was cognizant of Bankman-Fried’s need to prepare for trial.

Write to James Fanelli at james.fanelli@wsj.com and Corinne Ramey at corinne.ramey@wsj.com


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