Federal prosecutors requested FTX founder and former CEO Sam Bankman-Fried be detained on Wednesday, shifting their request at the last minute.
Previously, federal prosecutors wanted Bankman-Fried’s bail restrictions tightened, barring him from making extrajudicial statements. But FBI agents were present Wednesday in Manhattan federal court, prepared to take Bankman-Fried into custody.
“There are no set of conditions short of detention that could satisfy public safety,” federal prosecutor Danielle Sassoon said, adding Bankman-Fried’s latest actions “crossed the line.”
Wednesday’s hearing follows the disgraced crypto wunderkinds’ interactions with a reporter at the New York Times. An article published last week by the paper contained snippets of personal writings from Caroline Ellison, the former CEO of FTX’s sister company Alameda Research.
Bankman-Fried and Ellison dated at one point, and the article detailed how their breakup weighed on Ellison’s attitudes toward her job. The in-depth look at Ellison’s perspective from the helm of Alameda also said she didn’t feel “well suited” for the job.
Echoing previous accusations, Sassoon said Bankman-Fried tried to discredit a witness by leaking documents to the New York Times. She alleged it amounted to witness tampering. Ellison pleaded guilty to crimes in connection to the exchange’s collapse last year and is set to testify against Bankmnan-Fried, along with other members of his inner circle.
Bankman-Fried faces a litany of charges for his alleged role in FTX and Alameda’s collapse that include wire fraud, money laundering, and campaign finance law violations. Prosecutors claim he misappropriated customer funds to the tune of billions.
On Monday, Bankman-Fried’s counsel insisted their client had done nothing wrong in talking to the press. Lawyers at Cohen & Gressler LLP said he was within his rights to respond to an inquiry in a filing and “none of what occurred was improper.”
In January, federal prosecutors raised concerns that Bankman-Fried may have engaged in witness tampering by sending encrypted messages. Judge Kaplan subsequently barred Bankman-Fried from using the tech to communicate with FTX employees.
FTX imploded last year after a steep drop in the exchange’s native token FTT caused a flurry of customer withdrawals. FTX’s inability to satisfy customer withdrawals forced it to admit the firm did not hold one-to-one reserves of customer assets.
Following his arrest in the Bahamas, Bankman-Fried was extradited to the U.S. and currently resides under house arrest at his parent’s home in Palo Alto, California. His criminal trial is set to take place in October.