Manhattan federal district court Judge Lewis Kaplan revoked the bail of FTX founder Sam Bankman-Fried just months before his scheduled trial, a decision that placed the former crypto exchange executive in handcuffs on Friday.
Federal prosecutors had alleged Bankman-Fried, 31, violated his bail agreement by communicating with a New York Times reporter about his former girlfriend and primary witness for the prosecution, Caroline Ellison.
A gag order is not “a workable solution longer term particularly with someone who has shown a willingness and a desire to risk crossing the line in an effort to get right up to it no matter where the line is,” Kaplan said.
Ellison previously served as CEO of Alameda Research, an FTX-affiliated hedge fund, which prosecutors claim Bankman-Fried used to misappropriate FTX customer funds. Ellison has plead guilty to multiple fraud charges and entered a plea deal to testify against Bankman-Fried.
"Mr. Bankman-Fried’s contact with the New York Times reporter was not an attempt to intimidate Ms. Ellison or taint the jury pool," the fallen crypto executive's lawyers wrote in a letter to Judge Kaplan. "It was a proper exercise of his rights to make fair comment on an article already in progress, for which the reporter already had alternate sources."
According to prosecutors, Bankman-Fried shared with the Times reporter Ellison's personal diary-like writings explaining her frustrations with her position leading Alameda.
A grand jury in December handed down an indictment charging Bankman-Fried with misusing customer deposits to fuel Alameda. His trial is scheduled to begin October 2.
Bankman-Fried as been out of custody since late December following his indictment and extradition from the Bahamas, where FTX was headquartered, to the US.
Bankman-Fried’s prior bail conditions, which have been tightened multiple times since they were originally set by US Magistrate Judge Gabriel Gorenstein, require the defendant to reside at his parents’ Palo Alto, California home, along with a $250 million recognisance bond.
Kaplan had previously warned Bankman-Fried that his bail could be revoked.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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