A US judge on Wednesday temporarily barred FTX founder Sam Bankman-Fried from contacting current or former employees of the cryptocurrency exchange or its hedge fund Alameda Research and from using encrypted messaging tools like Signal.
US District Judge Lewis Kaplan’s ruling came after federal prosecutors in Manhattan said Bankman-Fried could tamper with witnesses or destroy evidence in his criminal fraud case. He was arrested in December on charges of looting billions of dollars FTX Customer funds and lying to investors and lenders.
Prosecutors last week cited a signal Message Bankman-Fried sent Jan. 15 to the general counsel of US subsidiary FTX, referred to in court filings as “Witness-1.” Bankman-Fried suggested the two would call to try “having a constructive relationship” or “check things out with each other.”
Bankman-Fried, 30, was under house arrest at his parents’ home in California after pleading not guilty. His lawyers said last week that his efforts to contact general counsel, the company’s current chief executive John Ray, were attempts to offer “help” and not to interfere.
Kaplan appeared skeptical of this argument, writing that Bankman-Fried’s January 15 message “appears to have been an attempt to get both the defendant and Witness-1 to sing from the same hymnal.”
“While the defendant’s attorney seeks to have the court interpret this message in a benevolent manner, that does not appear to be a convincing reading, at least for the time being,” Kaplan wrote.
A spokesman for Bankman-Fried declined to comment.
Kaplan wrote that the new restrictions on Bankman-Fried’s conduct would apply until at least February 7, when he held a hearing to consider the arguments of both sides. The order does not apply to Bankman-Fried’s immediate family members, and he can communicate with employees at FTX or Alameda when attorneys are present.
At next week’s hearing, Kaplan will also consider a request by Bankman-Fried’s attorneys to allow him access and transfers of cryptocurrency.
© Thomson Reuters 2023
