(Kitco News) -
On Jan. 27, Federal prosecutors filed a motion asking Judge Lewis Kaplan to ban former FTX CEO Sam Bankman-Fried from communicating with “current or former employees” of FTX or Alameda after he allegedly contacted one of their key witnesses. On Jan. 28, SBF’s lawyers filed their response, claiming he was just trying to be helpful, according to reports published Monday.
The Department of Justice (DoJ) claimed that Bankman-Fried reached out to Ryne Miller, General Counsel of FTX US, through both email and Signal on Jan. 15.
“I 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,” Bankman-Fried wrote.
In addition to the no-contact request, the DoJ also asked that Bankman-Fried be banned from using Signal and any other encrypted communication applications.
SBF’s lawyers responded that they object “to the nature and tone of the Government’s submission,” and they say the request was filed “In an apparent effort to portray our client in the worst possible light.”
Referring to their client’s efforts to communicate with new CEO John Ray and ‘Witness-1’, since identified as Miller, the lawyers argued that SBF had “publicly attempted to reach out to Mr. Ray numerous times to offer his assistance in the bankruptcy and asset recovery process, to the extent that he is permitted within the parameters of the criminal case.”
They added that since Ray was not involved with FTX until after the bankruptcy filing “he was not a percipient witness regarding any of the events alleged in the indictment.”
They claimed that Bankman-Fried’s email to Miller was just a friendly, good faith offer of assistance. “Although the Government seeks to characterize our client’s email as a sinister attempt to influence Witness-1 potential testimony, the email is more reasonably read as another attempt by Mr. Bankman-Fried to offer his assistance to FTX “as a resource.””
They also noted that “neither Mr. Ray nor Witness-1 had responded to our client.”
Bankman-Fried’s lawyers proposed a narrower set of bail conditions governing communications, including that he “be prohibited from contacting, even in the presence of his attorneys,” Ellison, Wang, Singh, Miller, and other specific parties to be agreed upon. They also propose that Bankman-Fried be allowed unlimited contact with Alan Joseph Bankman (his father), George Lerner (his therapist), any “employee or agent of a foreign regulator who contacts Mr. Bankman-Fried,” and anyone the latter might ask him to contact.
They also pushed back against the DoJ request that he be prohibited from using Signal and other forms of encrypted communication. “[A]ny concerns the Government may have about Mr. Bankman-Fried’s use of ephemeral messaging applications is addressed by the bail condition proposed by the defense, which will apply to all forms of communication,” they wrote. “Under the bail statute, the Government does not get to pick and choose the form of communication that a defendant may engage in.”
Their client’s past use of Signal isn’t doing him any favors in the present. The DoJ noted in their filing that Bankman-Fried’s use of the encrypted communication app to contact witnesses and other FTX personnel is consistent with “a history” of using the application for obstructive purposes. Exhibit A: The now-infamous Signal group chat entitled “Wirefraud,” which included Alameda CEO Caroline Ellison, FTX co-founder Gary Wang and FTX senior engineer Nishad Singh, two of which are now cooperating with Justice.
Perhaps most contentiously, Bankman-Fried’s lawyers ask that one of the key original bail provisions, that he be “prohibited from accessing or transferring any FTX or Alameda assets or cryptocurrency, including assets or cryptocurrency purchased with funds from FTX or Alameda,” be lifted.
“The Government justified that condition by stating to the Court that certain crypto assets in digital wallets belonging to Alameda had recently been accessed and transferred,” they wrote, but claim the DoJ “had no evidence that Mr. Bankman-Fried was responsible.”
If lifted, this could enable Bankman-Fried to access large sums of money, including from accounts of which neither the government nor the current leadership of FTX is aware, without violating his bail.
On Nov. 12, the day after FTX declared bankruptcy and SBF stepped down as CEO, it was Ryne Miller who took to twitter to address those suspicious crypto transfers.
Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions.
— Ryne Miller (@_Ryne_Miller) November 12, 2022
Bankman-Fried's criminal trial is scheduled to begin in early October 2023.
