By Luc Cohen
NEW YORK (Reuters) – A U.S. judge on Thursday extended a ban on FTX cryptocurrency exchange founder Sam Bankman-Fried’s ability to contact employees of companies he once controlled and use encrypted messaging technology while out on bail ahead of his trial on fraud charges.
U.S. District Judge Lewis Kaplan last week temporarily barred Bankman-Fried from contacting any current or former employees of FTX or Alameda Research, his hedge fund, after prosecutors raised concerns that the 30-year-old former billionaire may be trying to tamper with witnesses.
As a condition of Bankman-Fried’s release on $250 million bond, Kaplan also prevented Bankman-Fried from using messaging apps such as Signal that let users auto-delete messages until at least Thursday’s hearing in Manhattan federal court.
Lawyers for Bankman-Fried, who on Jan. 3 pleaded not guilty to fraud charges stemming from now-bankrupt FTX’s collapse, have argued that his efforts to contact FTX’s current general counsel and chief executive were attempts to offer “assistance” and not interfere.
Bankman-Fried’s lawyers said in court papers on Monday they had reached an agreement with prosecutors to exempt certain people from the no-contact order and to let him use communication tools such as Zoom and texting, as well as WhatsApp if he installed monitoring technology on his phone.
Kaplan rejected that proposed agreement on Tuesday and proceeded with the hearing on Bankman-Fried’s bail conditions on Thursday, without explaining why he denied the deal.
As part of the agreement with prosecutors, Bankman-Fried would have also withdrawn his objection to a bail condition preventing him from accessing FTX, Alameda or cryptocurrency assets.
His lawyers had originally proposed banning him from contacting only certain potential witnesses like former Alameda chief Caroline Ellison and former FTX technology chief Zixiao “Gary” Wang, who have pleaded guilty to fraud and are cooperating with prosecutors.
Bankman-Fried faces eight criminal counts including wire fraud and money laundering conspiracy and could face up to 115 years in prison if convicted, though any sentence would ultimately be determined by a judge based on a range of factors. His trial is scheduled to begin on Oct 2.
He rode a boom in the value of bitcoin and other digital assets to build a net worth of an estimated $26 billion and become an influential political donor in the United States. FTX collapsed in November after a wave of withdrawals and declared bankruptcy, wiping out Bankman-Fried’s fortune. He was extradited from the Bahamas, where he lived and where the exchange was based.
(Reporting by Luc Cohen in New York; Editing by Lisa Shumaker and Will Dunham)
