Disgraced FTX founder Sam Bankman-Fried is set to find out whether he will be jailed ahead of his trial after prosecutors asked judge to revoke his $250 million bail for trying to harass witness

• FTX founder Sam Bankman-Fried has returned to New York City for a court hearing that will decide whether he must go to jail while he awaits trial
• Bankman-Fried is accused leaking messages from his ex-girlfriend Caroline Ellison, where she detailed struggling as CEO of hedge fund Alameda Research
• He is facing over 100 years behind bars for charges related to the FTX collapse 

FTX founder Sam Bankman-Fried has returned to New York City for a court hearing that could decide whether he must go to jail while he awaits trial.

Prosecutors have asked a judge to revoke Bankman-Fried’s bail, claiming he tried to harass a key witness in his fraud case. 

His lawyers insist he shouldn’t be jailed for trying to protect his reputation against a barrage of unfavorable news stories.

The 31-year-old has been under house arrest at his parents’ home in Palo Alto, California, since his December extradition from the Bahamas on charges that he defrauded investors in his businesses and illegally diverted millions of dollars’ worth of cryptocurrency from customers using his FTX exchange.

Bankman-Fried’s $250 million bail package, which was the most expensive in US history, severely restricts his internet and phone usage.

Two weeks ago, prosecutors surprised Bankman-Fried’s attorneys by demanding his incarceration, saying he violated those rules by giving The New York Times the private writings of Caroline Ellison, his former girlfriend and the ex-CEO of Alameda Research, a cryptocurrency trading hedge fund that was one of his businesses.

Prosecutors maintained he was trying to sully her reputation and influence prospective jurors who might be summoned for his October trial.

Ellison pleaded guilty in December to criminal charges carrying a potential penalty of 110 years in prison. She has agreed to testify against Bankman-Fried as part of a deal that could lead to a more lenient sentence.

Bankman-Fried’s lawyers argued he probably failed in a quest to defend his reputation because the article cast Ellison in a sympathetic light. They also said prosecutors exaggerated the role Bankman-Fried had in the article.

They said prosecutors were trying to get their client locked up by offering evidence consisting of ‘innuendo, speculation, and scant facts.’

Since prosecutors made their detention request, U.S. District Judge Lewis A. Kaplan has imposed a gag order barring public comments by people participating in the trial, including Bankman-Fried.

David McCraw, a lawyer for the Times, has written to the judge, noting the First Amendment implications of any blanket gag order, as well as public interest in Ellison and her cryptocurrency trading firm.

Ellison confessed to a central role in a scheme defrauding investors of billions of dollars that went undetected, McGraw said.

‘It is not surprising that the public wants to know more about who she is and what she did and that news organizations would seek to provide to the public timely, pertinent, and fairly reported information about her, as The Times did in its story,’ McGraw said.

Bankman-Fried is facing a slew of criminal charges related to the collapse of his cryptocurrency exchange FTX in November. He allegedly misused billions of dollars from investors on lavish gifts and political donations, before losing shareholders their fortunes 

Since he was controversially released in December, Bankman-Fried has been hauled before Manhattan court several times for angering prosecutors, including violating his ban on using the internet to stream the Superbowl in February. 

After a back-and-forth over his use of the internet, a deal was struck where Bankman-Fried was given a flip phone with no internet and a laptop with limited functions. 

However, Kaplan rejected the deal due to fears he would ‘find a way around it’, and he has expressed frustration with Bankman-Fried’s complex bail process. 

The New York Times article at the heart of Wednesday’s hearing was titled ‘Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case’, and featured intimate information about her time as CEO of Alameda Research.

She detailed being ‘unhappy and overwhelmed’ by the role, and wrote in one leaked message from February 2022: ‘At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.’ 

Ellison’s battle to stay afloat at the company before it dramatically collapsed is fascinatingly detailed in the messages, including one addressed to Bankman-Fried where she said she wanted to leave because Alameda ‘felt too associated with you in a way that was painful.’

She also wrote that when Bankman-Fried was around, she had ‘an instinct to shrink and become smaller and quieter and defer to others,’ adding that ‘it doesn’t really feel like there’s an end in sight.’

Another shared document addressed to Bankman-Fried in April 2022 revealed  Ellison’s breakup from Bankman-Fried had ‘significantly decreased my excitement about Alameda’ – and that she had cut off communication with her ex-beau.

‘I felt pretty hurt/rejected,’ she wrote in the document seen by the Times. ‘Not giving you the contact you wanted felt like the only way I could regain a sense of power.’

Ellison was running the hedge fund despite being in her mid 20s, and she said in the document that she didn’t see herself as well suited for running a major company and struggled with making decisions. 

The Times claims the intimate information was available due to Ellison’s habit of journaling her thoughts in a private diary and on Google documents, which were then circulated among numerous lawyers after FTX’s collapse. Bankman-Fried’s lawyers also defended the alleged leak and said he would be within his rights to share information with a journalist. 

Prosecutors asked Kaplan to revoke Bankman-Fried’s bail as they claim he was the source of the information, alleging he did so to ‘interfere with a fair trial by an impartial jury.’

In previous court sessions, Kaplan indicated that he was open to revoking Bankman-Fried’s bail and having him await trial from behind bars. 

US Attorney Danielle Sassoon also alleged on Wednesday that Bankman-Fried had been a source for multiple stories surfacing in the media, which branded an ‘ongoing campaign with the press that has now crossed a line.’ 

However, the former crypto boss’ legal team fired back over claims he was trying to tamper with a witness, with attorney Mark Cohen slamming the prosecution for ‘pretending it never speaks to the media about this case.’

Reports indicate that audible gasps rung out across the courtroom when the government requested he be jailed, and Cohen claimed he wasn’t given prior notice over the move. 

‘We learned for the first time one minute before court that the government is seeking detention,’ he said, slamming the request as ‘not a proper process.’ 

The defense also argued that their client’s frequent public statements about his case are his constitutional right. 

His attorneys cited a ‘toxic’ approach from the press that has been ‘almost uniformly’ negative, which they feel means he has the ‘right to counter that public narrative by making fair comment in the media.’ 

The 31-year-old has made numerous public remarks and blog posts in recent months about his time waiting federal charges, and Sassoon said prosecutors feel they ‘placed too much trust in the defendant’ when they set his bail terms.

She said the prosecution now believes it is ‘not possible to design a set of adequate release conditions’ before he goes on trial, and the only way to protect the case would be to lock him up. 

Bankman-Fried’s defense team also said they will accept the gag order, but asked it to be equally applied to others involved in the case.

They noted that the restrictions on publicly speaking about the trial should count for ‘the government and all potential witnesses in this case’, likely meaning Ellison.

In a hearing in February, Kaplan placed restrictions on Bankman-Fried’s ability to message ex-colleagues at FTX after he allegedly coercing his former company’s legal counsel.

The move saw him breach the conditions of the largest bail in US history when he sent a text to his former legal team saying: ‘I know it’s been a while since we’ve talked. And I know things have ended up on the wrong foot.

‘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.’