The Justice Department charged Sam Bankman-Fried with eight criminal counts in December, including wire fraud and money laundering, and since that time, relations between the disgraced FTX founder and prosecutors have become increasingly strained.
The latest example came on Friday night when prosecutors complained Bankman-Fried has been in touch with potential witnesses in his criminal trial. In a letter to U.S. District Judge Lewis Kaplan, they cited Bankman-Fried’s alleged communication with FTX general counsel Ryne Miller.
On Jan. 15, the prosecutors said, Bankman-Fried contacted Miller over the encrypted messaging platform Signal, as well as email, and wrote, “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.”
The prosecutors added that Bankman-Fried had contacted other current and former FTX employees, reflecting what they described as a “history of using the application for obstructive purposes,” suggesting that Bankman-Fried is trying to influence potential witness testimony.
Because of Bankman-Fried’s activity, prosecutors asked Judge Kaplan for two new bail conditions: that Bankman-Fried not be able to contact current and former employees of FTX or Alameda, and that he not be allowed to use any encrypted or ephemeral call or messaging platforms, such as Signal. Bankman-Fried is currently allowed full access to the internet, which is allegedly one of the reasons he agreed to be extradited back to the United States from the Bahamas.
The prosecutors argued that the new conditions were necessary to “prevent obstruction of justice.”
In a letter filed to Judge Kaplan on Saturday morning, Bankman-Fried’s lawyers pushed back, writing that the government was “sandbagging” any efforts for the two teams to work together on modifying bail conditions.
According to Bankman-Fried’s lawyers, prosecutors had told Bankman-Fried’s defense team on Jan. 19 that they were aware he had contacted John Ray, the new CEO of FTX, as well as Miller, which the prosecutors viewed as inappropriate. They told Bankman-Fried’s lawyers that they would seek an additional bail condition that would prevent Bankman-Fried from contacting potential witnesses without the presence of lawyers.
Bankman-Fried’s lawyers argued that their client had been trying to publicly reach out to Ray to offer help with the bankruptcy and that he had the same charitable motives for reaching out to Miller, describing it as an “innocuous attempt to offer assistance.”
Even so, they agreed to the proposed bail condition to avoid litigation.
Now, however, his lawyers are arguing that the prosecutors’ updated restrictions—which would include contact with all current or former employees, as well as limiting Bankman-Fried’s use of messaging platforms—are beyond the initial proposed scope.
“The Government apparently, believes that a one-sided presentation—spun to put our client in the worst possible light—is the best way to get the outcome it seeks,” Bankman-Fried’s lawyers wrote, arguing that by filing the letter at 6:00 pm on a Friday, the defense team would not be able to offer a response to the negotiation.
Bankman-Fried’s lawyers proposed a different condition, which would prohibit Bankman-Fried from contacting several key FTX figures, including Caroline Ellison, Zixiao “Gary” Wang, Nishad Singh, and “Witness-1,” or Ryne Miller, as well as “others to be discussed with the government.” They also do not want his access to messaging platforms to be limited.
Finally, they asked Judge Kaplan to remove the bail condition imposed in January that prohibited Bankman-Fried from accessing FTX and Alameda assets, arguing that prosecutors had not offered any evidence that Bankman-Fried was behind the transfers from late December.
The latest conflict comes after Assistant U.S. Attorney Danielle Sassoon accused the FTX founder in early January of transferring Alameda assets from a crypto wallet, persuading the judge overseeing the case to restrict Bankman-Fried’s access to company funds and implying that his word should not be trusted, given the amount of false information he has tweeted in the past.
Bankman-Fried’s lawyers did not immediately reply to a request for comment from Fortune.
The decision is now in the hands of Judge Kaplan.
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