FTX founder Sam Bankman-Fried left a federal courtroom in handcuffs Friday when a judge revoked his bail after concluding that the fallen cryptocurrency wiz had repeatedly tried to influence witnesses against him.
Bankman-Fried drooped his head as Judge Lewis A. Kaplan explained at length why he believed the California man had repeatedly pushed the boundaries of his $250 million bail package to a point that Kaplan could no longer ensure the protection of the community, including prosecutors' witnesses, unless the 31-year-old was behind bars.
After the hearing ended, Bankman-Fried took off his suit jacket and tie and turned his watch and other personal belongings over to his lawyers. His hands were cuffed in front of him, and marshals then led him from the courtroom.
It was a spectacular fall for a man who prosecutors say portrayed himself as "a savior of the cryptocurrency industry" as he testified before Congress and hired celebrities including Larry David, Tom Brady and Stephen Curry to promote his businesses.
Kaplan said there was probable cause to believe Bankman-Fried had tried to "tamper with witnesses at least twice" since his December arrest, most recently by showing a journalist the private writings of a former girlfriend and key witness against him and in January when he reached out to FTX's general counsel with an encrypted communication.
The judge said he concluded there was a probability that Bankman-Fried had tried to influence both anticipated trial witnesses "and quite likely others whose names we don't even know" to get them to "back off, to have them hedge their cooperation with the government."
Bankman-Fried's lawyers insisted that their client's motives were innocent and he shouldn't be jailed for trying to protect his reputation against a barrage of unfavorable news stories.
Bankman-Fried was sent for the night to the Metropolitan Detention Center in Brooklyn. He had been under house arrest at his parents' home in Palo Alto, California, since his December extradition from the Bahamas on charges that he defrauded investors in his businesses and illegally diverted millions of dollars' worth of cryptocurrency from customers using his FTX exchange.
His bail package severely restricted his internet and phone usage. The judge noted that the strict rules did not stop him from reaching out in January to a top FTX lawyer, saying he "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."
At a February hearing, Kaplan said the communication "suggests to me that maybe he has committed or attempted to commit a federal felony while on release."
On Friday, Kaplan said he was rejecting defense claims that the communication was benign. Instead, he said, it seems to be an invitation for the FTX general counsel "to get together with Bankman-Fried" so that their recollections "are on the same page."
Two weeks ago, prosecutors surprised Bankman-Fried's attorneys by demanding his incarceration, saying he violated those rules by showing The New York Times the private writings of Caroline Ellison, his former girlfriend and the ex-CEO of Alameda Research, a cryptocurrency trading hedge fund that was one of his businesses.
