FTX’s Sam Bankman-Fried, DOJ tussle over his communications
Federal prosecutors are attempting to ban FTX founder Sam Bankman-Fried from privately contacting present and former staff of the bankrupt cryptocurrency change to stop potential witness tampering in a felony case accusing him of bilking buyers and clients.
The request, made in a letter filed late Friday by U.S. Justice Department attorneys, prompted an indignant response from Bankman-Fried’s lawyer, who accused prosecutors of twisting the information to solid the FTX founder in a sinister gentle forward of his trial scheduled later this 12 months.
The testy change prompted U.S. District Judge Lewis Kaplan in New York to difficulty a Saturday order that included admonishment for the opposing attorneys within the case to chorus from “pejorative characterizations” of one another’s actions and motives.
Bankman-Fried, 30, has been underneath confinement at his mother and father’ dwelling in Palo Alto, California, since pleading not responsible earlier this month to prices towards him. He is accused of diverting large sums of FTX buyer funds to purchase property, donate to politicians and finance dangerous trades at Alameda Research, his cryptocurrency hedge fund buying and selling agency.
Federal prosecutors raised their considerations about Bankman-Fried’s makes an attempt to attach with potential witnesses within the case after discovering he despatched an encrypted message over the Signal texting app on Jan. 15 to the final counsel of FTX US, in response to their letter to Kaplan.
“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 the FTX common counsel, dubbed “Witness 1,” within the prosecutors’ letter.
Federal prosecutors advised Kaplan that Bankman-Fried’s communications are an indication that he could also be making an attempt in affect a witness with incriminating proof towards him. As a safeguard, the prosecutors need Kaplan to revise the situations of Bankman-Fried’s bail so he cannot talk with present or former staff of FTX and Alameda Research outdoors the presence of a lawyer with out a waiver from the Justice Department.
But Bankman-Fried’s lawyer, Mark Cohen, painted a a lot completely different image in his fiery retort to the prosecutors. Cohen described Bankman-Fried’s effort to succeed in the FTX common counsel as “an innocuous attempt to offer assistance in FTX’s bankruptcy process.”
In his Saturday order, Kaplan demanded full copies of Bankman-Fried’s digital communications to be supplied by Monday.
Federal prosecutors additionally need Kaplan to alter the situations of Bankman-Fried’s bail to stop him from speaking by Signal, which has an auto-delete choice to make messages shortly disappear as well as encryption know-how to assist protect the contents from outsiders.
“Using Signal to contact potential witnesses increases the likelihood that detection of any attempt to obstruct justice by influencing a witness will itself be obstructed,” the prosecutors advised Kaplan.
But Cohen wrote that the message despatched to the FTX common counsel did not have an auto-delete characteristic. Cohen additionally assured the choose that Bankman-Fried has turned off the disappearing messages choice in his Signal account.
“The government cannot justify a bail condition based on an unfounded concern about what Mr. Bankman-Fried might do, when there is no evidence that he is, in fact, doing it,” Cohen stated.
Before prosecutors requested the choose to impose broad restrictions that might stop Bankman-Fried from privately speaking with any present or former FTX staff, Cohen stated the 2 sides had already been in negotiations to succeed in a “reasonable” compromise earlier than prosecutors “sandbagged” the talks with their late Friday letter to Kaplan.
By Cohen’s estimate, FTX and Alameda Research have about 350 present and former staff who could be blocked off from Bankman-Fried by a blanket ban, together with some which may have essential info for his protection throughout a trial tentatively scheduled to start in October.
Bankman-Fried was prepared to voluntarily conform to a prohibition towards him speaking with a number of high FTX executives in change for being allowed to stay in touch with others comparable to his father, his therapist nonetheless employed by the cryptocurrency change and a spread of different unidentified staff who immediately attain out to him.
Kaplan advised federal prosecutors to reply to Cohen’s claims in his seven-page letter by Monday.
