FTX founder Sam Bankman-Fried has been accused of intimidating witnesses ahead of his upcoming fraud trial in a new twist to the unfolding legal drama.
Consequently, prosecutors now argue that he must face jail time. They present this pressing argument following an alleged witness tampering incident.
Bankman-Fried, the former billionaire and FTX founder, lives primarily under house arrest in his parents’ Palo Alto, California home. His extradition to the U.S. occurred in December 2022 from the Bahamas. However, the circumstances drastically changed when prosecutors claimed he had used aggressive tactics to influence witness testimonies.
🇺🇸US Prosecutors are demanding the arrest of FTX founder, Sam Bankman-Fried. pic.twitter.com/eNPb56f10B
— Crypto Crib (@Crypto_Crib_) July 27, 2023
This accusation surfaced after The New York Times published an article on July 20, citing excerpts from Google documents belonging to Caroline Ellison, Bankman-Fried’s former romantic partner and former CEO of Alameda Research. The 31-year-old entrepreneur freely acknowledged giving these papers to a Times journalist.
The Manhattan U.S. Attorney’s office deemed such conduct unacceptable since it involved witness tampering. However, Bankman-Fried’s defence argues that these communications served merely as a means to safeguard his reputation.
Charges severed amid allegations of billion-dollar fraud
Bankman-Fried has pleaded not guilty to stealing billions of dollars from FTX customers to cover losses at his hedge fund, Alameda Research. Furthermore, Ellison, expected to testify against Bankman-Fried, has already pleaded guilty to fraud charges. In a December court hearing, she claimed that Bankman-Fried and other FTX executives benefited from billions of dollars in hidden loans from Alameda.
Moreover, two former FTX executives, Gary Wang and Nishad Singh, confessed their guilt over the FTX collapse and agreed to cooperate with the prosecutors. Amid these high-stakes developments, prosecutors have requested that Bankman-Fried be detained before his October trial. This dramatic request occurred during a hearing on Wednesday, July 26, wherein the judge barred Bankman-Fried from discussing the case.
Despite this turbulent legal landscape, Bankman-Fried’s legal team has delivered documents to the court that were previously shown to news reporters, as per a filing on July 27. The lawyers have now given copies of these documents to the U.S. government and the court.
Calls for transparency as trial looms
The request to seal the documents, however, sparked controversy. Critics argue that as these documents have been shared with a news outlet already, it seems inconsistent to block their further release.
The court, government, press, and public are very interested in any information about Bankman-Fried and Ellison, given their close relationship and her anticipated role as a critical witness in the October trial.
Additionally, prosecutors’ recent decision to drop campaign financing charges against Bankman-Fried adds another layer to this complex case. Federal prosecutors have asked to remove five charges against the FTX founder, citing a Bahamian court’s doubt regarding the U.S. government’s procedure in bringing the charges against Bankman-Fried.
Meanwhile, the court has imposed a gag order on Bankman-Fried due to his decision to speak to reporters, with prosecutors also asking for his imprisonment to prevent further disclosures. Resolving these issues will have far-reaching implications for the upcoming trial and the broader cryptocurrency industry.