Sam Bankman-Fried, Founder and CEO of the insolvent crypto exchange FTX, has made a return to New York City amidst intensifying legal pressures.
Bankman-Fried’s arrival in New York comes as prosecutors push for his incarceration and the cryptocurrency exchange founder awaits a court hearing in the Manhattan federal court on Friday, August 11, to determine his fate on getting jail term while he awaits trial.
Prosecutors Allege Witness Intimidation by FTX CEO
Sam Bankman-Fried’s return to New York follows a request by prosecutors to Judge Lewis A. Kaplan to withdraw the former FTX CEO’s bail. The request stated that Bankman-Fried violated court rules by “harassing a key witness” against his upcoming trial.
According to prosecutors, Bankman-Fried attempted to ruin Caroline Ellison’s reputation and possibly hinder her willingness to testify while simultaneously gaining the favor of the jurors by giving newspaper media, The New York Times, Ellison’s private writings to publish.
Caroline Ellison, who is believed to be the key witness in the case against the former FTX Founder, was the previous CEO of Alameda Research and Bankman-Fried’s ex-girlfriend.
Ellison is reportedly expected to testify at Bankman-Fried’s trial on October 2, and prosecutors have stated that the FTX CEO is looking to “publicly discredit a government witness.” And legal experts are currently at loggerheads on the potential legal consequences of Bankman-Fried’s actions.
Prosecutors have argued that the former FTX CEO should be charged and locked up while he awaits trial. However, Bankman-Fried’s legal team is attempting to dismiss the motion stating that the evidence comprised “innuendo, speculation, and scant facts.”
FTX, previously labeled the third largest crypto exchange firm globally, was founded in 2017 by Sam Bankman-Fried. The crypto exchange company’s growth was erratic and gained a massive reputation in just a short time.
However, its rapid growth attracted the attention of regulators and law enforcement officials, resulting in evidence of fraudulent activities and billions of dollars allegedly misappropriated by Bankman-Fried to support Alameda Research, a crypto hedge fund firm backed by FTX. Subsequently, Sam Bankman-Fried pleaded not guilty to charges of fraud and pillaging customer deposits.
Judge Kaplan Suggests FTX Founder, Bankman-Fried Faces Potential Jail Time
In response to prosecutors’ complaints, earlier this year, Judge Lewis A. Kaplan hinted at possibly jailing Bankman-Fried. Prosecutors had alleged that the former FTX CEO had exploited several loopholes in electronic communication to maintain contact that exceeded court limits.
According to court orders, Bankman-Fried was expected to comply with strict restrictions, including house arrest in his parent’s house in Palo Alto and electronic communication. But recent revelations also revealed that Bankman-Fried may have sent encrypted messages to a top FTX lawyer to “reconnect” and possibly “reestablish a constructive relationship.”
The controversy enveloping FTX Founder and CEO Sam Bankman-Fried shows no signs of abating as the crypto community and general public watch closely, anticipating the results of Bankman-Fried’s return to New York and potentially receiving jail time while he awaits trial.