AP Photo/Mary Altaffer
- Prosecutors want to send Sam Bankman-Fried to jail over alleged witness tampering.
- He showed a journalist diary entries by Caroline Ellison, an anticipated witness in his upcoming trial.
- Prosecutors want his home confinement revoked. The judge indicated he'll decide next week.
Prosecutors asked a federal judge Wednesday to send Sam Bankman-Fried to jail after he leaked his ex-girlfriend's private diary entries to the New York Times.
Assistant US Attorney Danielle Sassoon told US District Judge Lewis Kaplan at a court hearing that the leaks — in addition to Bankman-Fried's earlier contacts with the general counsel for FTX — amounted to witness tampering.
"No set of release conditions can ensure the safety of the community," Sassoon said at the hearing in Manhattan federal court.
Following the hearing, Kaplan issued a gag order forbidding Bankman-Fried, as well as his lawyers and representatives, from talking about the case.
Immediately after the hearing, a representative for Bankman-Fried declined to comment, then smiled.
Kaplan said he'll accept additional filings from the prosecutors and defense attorneys over the next week before deciding whether to revoke Bankman-Fried's bond conditions that allow him to remain under house arrest before his criminal trial, which is scheduled for October.
Wednesday's hearing followed volleys of sharp letters between prosecutors and defense attorneys over a New York Times story citing diary entries by Caroline Ellison. Ellison previously dated Bankman-Fried and was the co-CEO of his hedge fund Alameda Research. She was also accused in the scheme where prosecutors say they defrauded investors into FTX, his cryptocurrency fund, and pleaded guilty to charges in the case. She's expected to testify against Bankman-Fried at his trial.
Ellison's diary entries, kept on Google Docs and written last year, had depicted her weariness and angst working with Bankman-Fried amid their periodic relationship, the New York Times reported earlier this month.
In those entries, Ellison revealed feeling self-conscious in Bankman-Fried's presence and described her "instinct to shrink and become smaller and quieter and defer to others," according to the New York Times. Lawyers for Ellison declined to comment.
After that report, prosecutors told the judge that it was Bankman-Fried who leaked the entries in order to undermine Ellison as she prepares to testify against him. They asked the judge to issue a gag order against him.
At the hearing on Wednesday, prosecutors went a step further: They said home confinement couldn't keep Bankman-Fried under control and asked the judge to put him in jail.
"With this defendant, where there's a will, there's a way," Sassoon said. "And with this defendant, there is certainly a will."
Bankman-Fried keeps breaking his bail conditions
According to prosecutors, Bankman-Fried defrauded investors of FTX — plus broke a number of other laws — in part by commingling cryptocurrency funds with Alameda Research, the hedge fund he also controlled.
Bankman-Fried pleaded not guilty to the charges against him. The case has produced an enormous volume of discovery material, to the point where the FBI struggled to analyze the data on Bankman-Fried's laptop even with its specialized tools. In court Wednesday, Mark Cohen, Bankman-Fried's lawyer, said the material would fill three skyscrapers if it were all printed out.
When Bankman-Fried was initially arrested and extradited from the Bahamas in December, his attorneys and prosecutors agreed on a $250 million bond that allows him to live at home with his parents in California rather than remain in jail in New York ahead of his trial. Bankman-Fried can use his laptop — with restrictions — which allows him to help his lawyers search and sift through the massive amounts of material while preparing for his trial.
—Jacob Shamsian ⚖️ (@JayShams) July 26, 2023
But Bankman-Fried has repeatedly abused these carveouts, prosecutors said. He used messaging apps that permitted auto-deleting and encrypted texts. He installed a VPN, supposedly to watch football finals and the Super Bowl.
Earlier in the year, he messaged the general counsel for FTX with the encrypted messaging app Signal — which prosecutors said amounted to witness tampering.
"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 in the message.
With each apparent transgression, Kaplan has allowed prosecutors to add additional incremental restrictions to Bankman-Fried's release conditions. He has also appeared at times irked that prosecutors didn't ask to impose clearer and broader restrictions in anticipation of his actions.
Bankman-Fried's talks with journalists could cause problems at the trial
On Wednesday, it was clear prosecutors were fed up.
Sassoon said the earlier contact with FTX's lawyer and the Ellison leaks amounted to witness tampering. She said the journal leaks "were meant to embarrass Ms. Ellison" and intimidate other potential witnesses. Bankman-Fried, Sassoon said, was bent on breaking the rules "regardless of conditions that are in place."
Cohen said Bankman-Fried was simply responding to a journalist's inquiry and fighting back against the deluge of bad media coverage. He said his client only showed a page or two of Ellison's diary entries to the Times reporter and didn't send full copies.
Such behavior, Cohen said, was protected by the First Amendment, even if it was a questionable strategy.
"That might be a good strategy, that might be a bad strategy," Cohen said. "Given the fact that the stories about him continue to be negative, I suggest it would be a bad strategy."
According to prosecutors, Bankman-Fried did far more than simply respond to press inquiries. He sent over 100 emails and had over 1,000 calls with journalists. Among them, were 100 calls to the Times journalist who wrote the story about Ellison's diary and 500 with the author Michael Lewis, according to prosecutors. Lewis is a frequent visitor at Bankman-Fried's family home, Sassoon said, and his blockbuster book about Bankman-Fried is due to be released just before the scheduled trial.
All this material, prosecutors say, could cause problems at the trial by tainting the jury with information that wouldn't be admissible in court.
Before issuing a temporary gag order — which Cohen accepted — Kaplan said he was mindful of Bankman-Fried's need to access documents for his defense, the First Amendment issues at stake, and prosecutors' interest in protecting witnesses. He said he would take those issues "seriously" when deciding whether to jail the defendant.
"I say to the defendant, Mr. Bankman-Fried, you better be taking it seriously, too," he said.
This story has been updated.