Federal prosecutors are trying to prohibit FTX founder Sam Bankman-Fried from privately contacting current and former employees of the bankrupt cryptocurrency exchange to prevent potential witness tampering in a criminal case accusing him of bilking investors and customers, Michael Liedtke reported for the Associated Press (AP).
Photo Insert: "SBF," as he is commonly known, is accused of diverting massive sums of FTX customer funds to buy property, donate to politicians and finance risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.
The request, made in a letter sent Friday by US Justice Department lawyers, prompted an indignant response from Bankman-Fried’s lawyer, who accused prosecutors of twisting the facts to cast the FTX founder in a sinister light ahead of his trial scheduled later this year.
The testy exchange prompted US District Judge Lewis Kaplan in New York to issue a Saturday order that admonished the opposing lawyers in the case to refrain from “pejorative characterizations” of each other’s actions and motives.
Bankman-Fried, 30, has been under confinement at his parents’ home in Palo Alto, California, since pleading not guilty earlier this month to charges against him.
He is accused of diverting massive sums of FTX customer funds to buy property, donate to politicians and finance risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.
Federal prosecutors raised their concerns about Bankman-Fried’s attempts to connect with potential witnesses in the case after discovering he sent an encrypted message over the Signal texting app on Jan. 15 to the general counsel of FTX US, according 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 general counsel, dubbed “Witness 1,” in the prosecutors’ letter.
Federal prosecutors told Kaplan that Bankman-Fried’s communications are a sign that he may be trying to influence a witness with incriminating evidence against him.
As a safeguard, the prosecutors want Kaplan to revise the conditions of Bankman-Fried’s bail so he can’t communicate with current or former employees of FTX and Alameda Research outside the presence of a lawyer without a waiver from the Justice Department.