NY appeals court signals it won’t release FTX crypto exec SBF from jail pretrial: ‘He makes his own bed, he sleeps in it’

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NEW YORK — A New York appeals court on Tuesday signaled it was unlikely to release Sam Bankman-Fried from jail pretrial, with one judge quipping the disgraced crypto entrepreneur had made the bed “he’s sleeping in” when he leaked the digital diary of the star witness in his case.

Bankman-Fried, 31, has been at Brooklyn’s Metropolitan Detention Center since Aug. 11, when Manhattan federal court Judge Lewis Kaplan revoked his staggering $250 million bond amid witness tampering allegations.

Prosecutors requested the judge make the dramatic move amid suspicions the fallen FTX founder had leaked the personal writings of his ex-girlfriend and convicted co-conspirator Caroline Ellison to the New York Times.

Ellison, who oversaw Bankman-Fried’s hedge fund Alameda Research, pleaded guilty to charges after his arrest and is expected to take the stand for the prosecution when the trial starts next month.

Arguing before the 2nd Circuit Court of Appeals, Bankman-Fried’s lawyer, Mark Cohen, said Kaplan should have considered Bankman-Fried’s free speech rights when he locked him up for talking to The Times.

It didn’t seem to sway the panel.

“There’s nothing special about talking to a reporter that is more protected than speaking to any other person on the street, right?” U.S. Circuit Judge William Nardini said.

“If, at any point, the speech is designed to intimidate or influence a witness in a way that violates the law, then the First Amendment protections are no longer in place.”

Assistant U.S. Attorney Danielle Sassoon, arguing for the government, said ample evidence showed that Bankman-Fried engaged in witness tampering intended to intimidate Ellison and dissuade her from testifying.

Sasson noted it wasn’t the first incident of possible witness tampering since Bankman-Fried faced charges. Shortly after his arrest, in January, he contacted FTX’s general counsel asking if they could “use each other as resources when possible and vet things with each other.”

“Here, given the constellation of facts, there was ample basis to conclude that the conduct with respect to the New York Times amounted to witness tampering — that includes the content of the material, which, on appeal, counsel does not dispute, painted Ms. Ellison in an unfavorable light,” Sassoon said.

“And as Judge Kaplan found, would be unlikely to be shared absent an intent to hurt, discredit, or frighten the subject of the material.”

In the writings, Ellison wrote about constantly doubting her ability to run her on-again-off-again lover’s hedge fund due to their frequent separations and re-couplings, combined with volatility in the market, among other personal matters.

Bankman-Fried’s lawyer also argued Kaplan’s decision to remand him had made it impossible to prepare for his trial, given the bad internet service at the MDC and in a cell block by Manhattan federal court, where Kaplan has permitted him to work with his lawyers two days a week. Cohen said he recently couldn’t open one file in a trove of documents that would be “three skyscrapers” tall were it printed out.

“It’s so slow as to be meaningless,” he said.

“Well, again, if this was going to be this important to your client, it would have been a very, very good consideration for him to have taken into account before he decided, as Judge Kaplan found, to intimidate or influence witnesses,” Nardini said.

“Like anyone else — if it is true he has intimidated witnesses — at a certain point, he makes his own bed, he sleeps in it.”

Bankman-Fried is accused of siphoning billions of dollars from his cryptocurrency exchange platform FTX to fund extensive lobbying efforts in Washington D.C., pay off his hedge fund debts, and live lavishly in the Caribbean. He’s pleaded not guilty to seven fraud and conspiracy charges, carrying a lengthy prison term.

Ellison is one of four of his former associates who have pleaded out since his extradition from the Bahamas, where FTX was based, following his arrest and FTX’s implosion in late 2022. At least three are cooperating.

The 2nd Circuit panel did not estimate when they would issue a decision. The trial is slated to begin Oct. 2.