(Kitco News) -
The judge presiding over former FTX CEO Sam Bankman-Fried’s criminal trial has ruled in favor of prosecutors to amend SBF’s bail conditions to include bans from contacting current or former employees of FTX and Alameda and from using any encrypted or auto-deleting communication apps.
On Jan. 27, Federal prosecutors filed the motion requesting the bans after Bankman-Fried allegedly contacted one of their key witnesses. SBF’s lawyers filed their response on Jan. 28, claiming he was just trying to be helpful.
The Department of Justice (DoJ) claimed that Bankman-Fried reached out to Witness-1, since identified as 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 to Miller.
Bankman-Fried’s lawyers argued that the message 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.””
Judge Kaplan agreed with the prosecution that the message did not appear helpful or innocent.
“While defendant’s counsel seeks to have the Court interpret that message in a benign way, that does not appear, on a preliminary basis, to be a persuasive reading,” Kaplan wrote in his Feb. 1 ruling. “The message […] invites a “constructive” repaired relationship. It proposes that the defendant and Witness-1 “vet things with each other.” Subject to hearing counsel’s argument, the message in its entirety seems to be an invitation for Witness-1 to align his views and recollections with defendant’s version of events and thus make their relationship “constructive.” In perhaps more colloquial terms, it appears to have been an effort to have both the defendant and Witness-1 sing out of the same hymn book.”
Kaplan added that Bankman-Fried has “a possible motive” for this interpretation because “Witness-1 undisputedly was a witness to some events likely to be at issue in this case, and defendant is facing the possibility of a long prison term.” He also noted that the message “invited a telephonic rather than written response,” which parallels other examples of Bankman-Fried favoring ephemeral communications over written or permanent ones while he was running FTX and Alameda.
“Here, the undisputed information available to the Court regarding the “nature and seriousness of the danger . . . posed by [defendant’s continued] release” on the existing conditions has changed substantially since he was released, and there appears to be a material threat of inappropriate contact with prospective witnesses,” Kaplan wrote. “That risk, the Court finds, is clearly and convincingly sufficient to warrant the imposition of additional conditions pending the full argument of the cross-applications.”
Judge Kaplan will hear arguments from both sides on this matter on February 7, 2023. Kaplan will also decide at that time whether to grant the defense’s motion that SBF no longer be barred from accessing wallets and accounts containing FTX and Alameda funds as part of his bail conditions. If lifted, this could give Bankman-Fried access to large sums of money, including from accounts of which neither the government nor the current leadership of FTX is aware, without violating his bail.
Bankman-Fried's criminal trial is scheduled to begin in October 2023.
