Federal prosecutors requested the former cryptocurrency tycoon be jailed before trial, saying he had ‘crossed a line’.
A US judge on Friday revoked Sam Bankman-Fried’s bail, after finding probable cause that the indicted founder of the bankrupt FTX cryptocurrency exchange tampered with witnesses at least twice.
United States District Judge Lewis Kaplan announced the decision on Friday at a hearing over Bankman-Fried’s bail conditions in federal court in Manhattan, less than two months before the scheduled October fraud trial.
He rejected a defense request to delay Bankman-Fried’s detention pending appeal of the bail revocation.
The decision could complicate Bankman-Fried’s efforts to prepare for trial, where the 31-year-old former billionaire faces charges of having stolen billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund.
Bankman-Fried has pleaded not guilty.
He was led out of the courtroom by members of the US Marshals Service in handcuffs after removing his shoelaces, jacket and tie and emptying his pockets.
His parents, both law professors at Stanford University, were present in the courtroom’s audience. His mother, Barbara Fried, nodded to him in tears as he left. His father, Joseph Bankman, placed his hand over his heart as he watched his son be led away.
Prosecutors first made their request to jail the former billionaire in a July 26 hearing, saying he “crossed a line” by sharing former romantic partner Caroline Ellison’s personal writings with a New York Times reporter. Ellison was also chief executive ay Alameda Research.
As part of his bail conditions, prosecutors had been able to monitor his telephone and internet activity. Kaplan said he was concerned that Bankman-Fried showed the writings to the reporter during an in-person meeting at his parents’ home.
“It was a way, in his view, of doing this in a manner in which he was least likely to be caught,” Kaplan said. “He was covering his tracks.”
His lawyers said prosecutors mischaracterized his intentions in sharing Ellison’s writings, arguing he wanted to defend his reputation and he had a right to speak to the press.
Bankman-Fried has been largely confined to his parents’ Palo Alto, California, home on $250m bond since his December arrest.
Ellison and two other former members of Bankman-Fried’s inner circle have pleaded guilty to fraud and agreed to cooperate with the US Attorney’s Office in Manhattan. Ellison is expected to testify against Bankman-Fried at his trial, scheduled to begin on October 2.
At the July 26 hearing, Kaplan restricted Bankman-Fried from speaking publicly about his case.
The gag order has drawn attention from news media, including the Times, which in an August 2 letter said Bankman-Fried should be restricted only from making comments that could interfere with a fair trial.
A July 20 article in the newspaper contained excerpts from Ellison’s personal Google documents written prior to FTX’s collapse.
She described being “unhappy and overwhelmed” with her job and feeling “hurt/rejected” from her personal breakup with Bankman-Fried.