AP

FTX founder heads to court after judge rejects bail request

Feb 7, 2023, 1:20 AM | Updated: 4:08 pm

FILE - FTX founder Sam Bankman-Fried leaves Manhattan federal court on Jan. 3, 2023, in New York, a...

FILE - FTX founder Sam Bankman-Fried leaves Manhattan federal court on Jan. 3, 2023, in New York, after he pleaded not guilty to charges that he cheated investors and looted customer deposits on his cryptocurrency trading platform. Federal prosecutors on Friday, Jan. 27, are trying to prohibit FTX founder Sam Bankman-Fried from privately contacting current and former employees of the bankrupt cryptocurrency exchange to prevent potential witness tampering in a criminal case accusing him of bilking investors and customers. (AP Photo/Seth Wenig, File)

(AP Photo/Seth Wenig, File)

NEW YORK (AP) — FTX founder Sam Bankman-Fried will head to a New York courtroom Thursday to face a federal judge who said his effort to contact a likely trial witness against him seemed designed so they would “sing out of the same hymn book.”

On Tuesday, Judge Lewis A. Kaplan rejected Bankman’s-Fried’s lawyers’ request that oral arguments about his bail be cancelled because lawyers on both sides have settled their differences on necessary changes to his bail package in order to prevent inappropriate contact with witnesses or damaging encrypted social media communications.

The arguments, set for Thursday morning, will proceed as scheduled, the judge ruled as he declined to immediately approve new bail conditions that defense lawyers said prosecutors had agreed with, including the exemption of certain individuals from a proposed no-contact list and permission for Bankman-Fried to place audio and video calls.

The hearing was scheduled after prosecutors said Bankman-Fried sent an encrypted message over the Signal texting app on Jan. 15 to the general counsel of FTX US.

“I 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. I’d love to get on a phone call sometime soon and chat,” Bankman-Fried wrote to the FTX general counsel, who isn’t named but is dubbed “Witness 1,” in the prosecutors’ letter.

Federal prosecutors told Kaplan that Bankman-Fried’s communications indicate he may be trying to influence a witness with incriminating evidence against him.

Last week, Kaplan wrote that Bankman’s-Fried’s lawyers appealed to him to interpret the message “in a benign way.” But he said their argument was not persuasive.

“In perhaps more colloquial terms, it appears to have been an effort to have both the defendant and Witness 1 sing out of the same hymn book,” Kaplan said.

The judge said a possible motive was evident from the fact that the general counsel was undisputedly a witness to some events likely to be at issue in the case and Bankman-Fried faces the possibility of a long prison term if he is convicted.

Kaplan said the question of whether further measures should be taken to restrict Bankman-Fried’s actions was also raised by allegations that he directed employees in the past to use applications whose communications could be erased and because he had invited a telephonic rather than written response from the general counsel.

The judge said he must decide whether further measures should be imposed to assure the safety of the community from efforts by Bankman-Fried to influence or tamper with prospective witnesses.

Bankman-Fried, 30, has been confined with electronic monitoring to his parents’ home in Palo Alto, California, since his December arrest on charges that he cheated investors and that he looted customer deposits on his cryptocurrency trading platform, in part to finance political donations and make risky trades at Alameda Research.

He has pleaded not guilty. A trial has been tentatively set for early October.

Also Tuesday, lawyers for Bankman-Fried appealed Kaplan’s decision to make public the names of two individuals who signed Bankman-Fried’s $250 million personal recognizance bond. The names, which were ordered revealed at the request of news outlets, will remain secret while the appeal is considered.

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FTX founder heads to court after judge rejects bail request