US judge questions Sam Bankman-Fried’s bail conditions

A US federal judge has questioned Sam Bankman-Fried’s “extraordinary” bail conditions following prosecutors’ allegations of potential witness tampering, while raising the prospect that the FTX founder could be forced to await his criminal trial in jail rather than his parents’ home.

Judge Lewis Kaplan, who is presiding over the case against Bankman-Fried, challenged whether prosecutors’ proposal to stop the defendant from accessing the internet on certain devices was sufficiently stringent, after the former billionaire used an encrypted messaging app to contact FTX US’s general counsel, and used a VPN to watch the Super Bowl.

“We are dealing with somebody . . . [who has done things that could amount to] a federal felony on release, namely witness tampering or attempted witness tampering,” Kaplan said at an hour-long hearing in Manhattan federal court on Thursday, at which Bankman-Fried was present.

“Why am I being asked to turn him loose in this garden of electronic devices,” the judge added, referring to the Palo Alto house belonging to Bankman-Fried’s parents, to which he is confined after posting a $250mn bond.

Bankman-Fried’s bail conditions were originally agreed by a New York magistrate judge in December, before Judge Kaplan was assigned to the case. Campaigners criticised the arrangement, claiming Bankman-Fried was receiving favourable treatment as a white-collar defendant, while many accused of lesser offences await trial behind bars.

In the weeks since, the government has repeatedly tried to amend Bankman-Fried’s bail conditions, after certain cryptocurrency wallets related to FTX and its associated trading company Alameda were emptied. Prosecutors have also accused Bankman-Fried of attempting to contact both FTX US general counsel Ryne Miller and John Ray, who is managing FTX’s bankruptcy.

Lawyers for Bankman-Fried have maintained there is no evidence their client emptied the wallets in question, and that Bankman-Fried’s messages to former colleagues were not an attempt to influence potential witnesses in the trial scheduled for October.

Bankman-Fried’s lawyers have also claimed they need the internet to communicate with their client, and use shared apps such as Google Docs. The government has argued Bankman-Fried needs to use the internet to access evidence, including a read-only version of FTX customer database.

Responding to the government’s proposal that Bankman-Fried only be able to use certain monitored devices, Kaplan retorted: “You are putting an awful lot of trust in him aren’t you?”

The government’s proposal would allow Bankman-Fried to remain in “a house with a whole load of unmonitored devices”, Kaplan said, adding that there “is a solution, but it is not one anyone has proposed yet”. He went on to say that while this was not a proceeding at which the revocation of bail was being discussed, “it could get there”.

Addressing Bankman-Fried’s lawyers, who had asked the court to impose much more lax limitations on technology use, Kaplan ran through the list of alleged bail violations, adding: “Your client did all that, and your client is at liberty, in quite extraordinary conditions.”

Regarding the use of a VPN, which uses encryption, “If there is one person in this courtroom who knew [that a VPN can be used to circumvent surveillance] . . . I am betting it is your client.”

He added plenty of defendants were “in the federal system who are detained and asked to prepare their cases without access to the internet”.

Mark Cohen, Bankman-Fried’s lawyer, said his client was “literally on trial for his life”, and now understands “that there is no margin for error”.

Kaplan ordered both sides to return within a few days with proposed orders that would satisfy his concerns. “I want this to be tight,” he said.