July 15, 2024

Bankman-Fried faces charges of fraud and conspiracy stemming from the collapse of cryptocurrency exchange FTX.

An appeals court in the United States has upheld a decision to revoke former cryptocurrency billionaire Sam Bankman-Fried’s bail and hold him in custody pending trial.

Bankman-Fried is accused of fraud stemming from the November 2022 collapse of his now-bankrupt FTX exchange and is due to go on trial on October 3.

In a written decision, a three-judge panel of the 2nd US Circuit Court of Appeals in Manhattan said it agreed with US District Judge Lewis Kaplan’s finding that Bankman-Fried had probably attempted to tamper with two witnesses.

This included his sharing the personal writings of Caroline Ellison, the former chief executive of his Alameda Research hedge fund, with a New York Times reporter.

Ellison has pleaded guilty to fraud and is expected to testify against Bankman-Fried, a former romantic partner. In her writings, she described feeling “unhappy and overwhelmed” with her job and “hurt/rejected” after the end of her relationship with Bankman-Fried.

Kaplan had revoked Bankman-Fried’s $250m bail on August 11.

The three judges on Thursday said they were unpersuaded by Bankman-Fried’s argument that Kaplan failed to credit the defendant for exercising his First Amendment constitutional right to speak with the press and try to restore his reputation.

They wrote that Kaplan “correctly determined that when a person engages in speech to commit a criminal offence such as witness tampering, that speech falls outside the zone of constitutional protection”.

Bankman-Fried faces seven charges of fraud and conspiracy stemming from the collapse of FTX, the now-bankrupt crypto exchange he founded.

Prosecutors accused him of looting billions of dollars in FTX customer funds to plug losses at Alameda, buy luxury real estate and donate to US political campaigns.

Bankman-Fried has pleaded not guilty while acknowledging risk management failures.

He has also complained that a lack of internet access at Brooklyn’s Metropolitan Detention Center has made it hard for him to review evidence to prepare for trial.

Earlier on Thursday, Kaplan restricted Bankman-Fried’s ability to call expert witnesses to testify at trial.

Court papers suggested Bankman-Fried’s lawyers would seek to use the experts’ testimony to bolster arguments that FTX’s terms of service did not prevent the use of customer funds to make investments – much as banks use deposits to fund loans – and the practice had been common in the cryptocurrency industry.

But Kaplan said three proposed witnesses could not take the stand because their testimony was irrelevant or could confuse the jury. He also said Bankman-Fried may seek to call the remaining four experts, but only to rebut prosecution witnesses.

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