MANHATTAN (CN) — FTX founder Sam Bankman-Fried’s leaks of a star witness’s diaries to the New York Times amount to tampering and intimidation, federal prosecutors said Wednesday, asking a New York judge revoke the 31-year-old’s house arrest and remand him to pretrial detention.
Prosecutors in the Southern District of New York alleged that Bankman-Fried’s handing over the diaries of his on-again, off-again girlfriend Caroline Ellison, a former Alameda Research co-CEO, were an attempt to interfere with a fair trial by an impartial jury.
The private documents from a Google Drive account were published last week in an article titled “Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case.”
Presiding U.S. District Judge Lewis Kaplan did not rule from the bench on the revocation of Bankman-Fried’s $250 million bail package, but warned him to be mindful of the stakes ahead of his trial set to begin in October.
“I’m aware, I think pretty fully, about the document issues and the need for access by the defendant,” the judge said at the conclusion of hourlong hearing. "I’m certainly very mindful of his First Amendment rights and I am very mindful of the government's interest in this issue, which I take seriously. And I say to the defendant: Mr. Bankman-Fried, you better take it seriously too.”
Judge Kaplan imposed an interim gag order, in effect until he rules on prosecutors’ bid to jail Bankman-Fried.
Parties in the case are forbidden “from publicly disseminating or discussing with any public communications media anything about the case, including statements about the identity, testimony, or credibility of prospective witnesses, information that has not been deemed admissible at trial and statements intended to influence public opinion regarding the merits of the case."
Kaplan's order further prohibits Bankman-Fried from “from causing others, such as surrogates, family members, spokespersons, representatives, or volunteers, from making such statements on his behalf."
If he is remanded ahead of trial, Bankman-Fried would likely be detained at the notorious Metropolitan Detention Center in Brooklyn.
Bankman-Fried’s defense attorney Mark Cohen urged the judge to address the government’s concerns with “a less restrictive alternative.”
Assistant U.S. Attorney Danielle Sassoon acknowledged Bankman-Fried’s constitutional right to have a public trial strategy, but said his repeated contact with reporters, and the New York Times reporter in particular, were intended to disparage a trial witness and taint the pool of prospective jurors.
“Here where the strategy for rehabilitating his reputation was discrediting and blaming Caroline Ellison in a national and international publication that is read by many prospective jurors in this district," Sassoon said at the bail hearing, "has crossed a line towards improperly influencing those prospective jurors and intimidating a witness, and send a message to prospective witnesses."
Prosecutors argued that by choosing a venerable journalistic institution like The Times for the leaks, Bankman-Fried lent a “misleading patina of legitimacy to what would otherwise be naked advocacy.”
“By selectively sharing certain private documents with The New York Times the defendant is attempting to discredit a witness, cast Ellison in a poor light and advance his defense through the press and outside the constraints of the courtroom and rules of evidence: that Ellison was a jilted lover who perpetrated these crimes alone,” the government wrote in a letter last week. “The fact that the defendant funneled this material through The New York Times, rather than directly commenting on the documents himself, is particularly pernicious.”
The New York Times defended the paper's reporting practices. "Newsmakers are allowed to call reporters and reporters are allowed to call newsmakers," a New York Times spokesperson told Courthouse News on Wednesday. "Any attempt to cast such calls in a negative light appears intended to intimidate people from exercising their First Amendment rights."
Bankman-Fried faces multiple counts of fraud and conspiracy for allegedly misappropriating billions of dollars of FTX customers’ funds to pay expenses and debts of a crypto hedge fund, Alameda Research, of which he was a co-founder and majority share owner.
Thanks to the $250 million bond, Bankman-Fried has spent the last three months confined to his parents’ home in Palo Alto, California, on house arrest.
Earlier this year, Judge Kaplan tightened Bankman-Fried’s bail conditions after prosecutors flagged suspicious online activity using encrypted messaging apps and virtual private network.
Last month, Bankman-Fried won the severance of his case into two separate trials, the first in October on the eight counts of his initial indictment, and then a second trial in March 2024 on five additional counts brought after he consented to extradition from the Bahamas.
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