By MacKenzie Sigalos and Dawn Giel - CNBC
Sam Bankman-Fried will enter prison Friday after a judge granted federal prosecutors' request to revoke the FTX co-founder's bail for alleged witness tampering. Bankman-Fried will be remanded in custody directly after a court hearing in New York, where she will remain awaiting her trial, which is scheduled to begin on Oct. 2.
Judge Lewis Kaplan denied Bankman-Fried's request to postpone his detention pending an appeal.
Since her arrest in December, Bankman-Fried was on probation on $250 million bail, which required her to stay at her parents' home in Palo Alto, California.
FTX co-founder Sam Bankman-Fried arrives in court in Manhattan, Friday, Aug. 11, 2023.
Bankman-Fried's court appearance Friday is the latest in a series of pretrial hearings related to the former billionaire's ongoing contacts with the press, exchanges the Justice Department considers a "pattern of witness tampering and evasion of bail conditions."
Judge Kaplan issued a direct and stern warning to Bankman-Fried in July for her conversations with the media.
Members of the press, including lawyers for The New York Times and the Reporters Committee for Freedom of the Press, had submitted letters expressing opposition to Bankman-Fried's detention, citing concerns about freedom of expression. Defense attorneys also argued that Bankman-Fried was asserting her First Amendment right and was not violating any of her bail conditions by speaking to reporters.
The defense also hoped that the discovery process would help in their case.
Lawyers representing the former FTX director said that if Bankman-Fried was in jail, he would not be able to adequately prepare for his trial because of the amount of evidence he can only access through a computer with internet access.
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In Bankman-Fried's arrest petition, the government claimed that, in recent months, the defendant had sent more than 100 emails to the media and made more than 1,000 phone calls to members of the press. According to prosecutors, the straw that broke the camel's back was that Bankman-Fried leaked to The New York Times notes from the private diary of his ex-girlfriend, Caroline Ellison, who pleaded guilty to the federal charges in December 2022.
Ellison, who was also chief executive of Bankman-Fried's failed cryptocurrency fund Alameda Research, has been cooperating with the government since December and is expected to be a star witness for the prosecution.
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"Due to a number of conditions intended to limit the defendant's use of the internet and telephone, [Bankman-Fried] moved toward machinations in person," the prosecution said of the FTX co-founder, whose revised bail conditions include restricted internet access and a ban on smartphone use.
The government added that Bankman-Fried made more than 100 phone calls to one of the authors of the Times article before it was published, many of which lasted about 20 minutes.
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The prosecution described the actions of Bankman-Fried, who faces several wire and securities fraud charges related to the alleged multimillion-dollar FTX fraud, as an attempt to discredit Ellison, and characterized that effort as a "means of indirect intimidation of witnesses through the press."
It was enough of an argument to convince Judge Kaplan to send Bankman-Fried to prison before her trial.
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Prosecutors have had to drop charges twice to comply with an extradition agreement signed with the Bahamas, where Bankman-Fried was detained. The government informed the judge in a letter that next week it plans to present a new accusation.