A judge has determined that Sam Bankman-Fried, the founder of FTX, should be detained prior to his criminal trial. The ruling was in favor of federal prosecutors who claimed that Bankman-Fried had tampered with witnesses and violated the terms of his bail.
Following the decision by U.S. District Judge Lewis A. Kaplan, Bankman-Fried was placed in handcuffs and escorted out of the courtroom. He will remain at a federal detention center in Brooklyn until his trial on October 2, as stated in the order.
Since December, the 31-year-old has been confined to his parents' residence in California after being extradited from the Bahamas on charges of defrauding investors through his now-defunct cryptocurrency exchange.
The conditions of Bankman-Fried's bail had been tightened leading up to the ruling, but it was ultimately his interaction with the media that led to his detention.
In July, he shared personal diary entries belonging to Caroline Ellison, his former romantic partner and the CEO of their jointly founded trading firm, with a reporter from the New York Times at his parents' residence in California. Prosecutors have characterized this disclosure as an act of witness intimidation and described the article published on July 20 as the pivotal moment in their efforts to revoke Bankman-Fried's bail.
Both the New York Times and the Reporters Committee for Freedom of the Press argued against Bankman-Fried's imprisonment, submitting letters that claimed his detention would infringe upon his freedom of speech.
Bankman-Fried's defense lawyers argued that he had a First Amendment right to protect his reputation and noted that there was no court order preventing him from speaking to the media.
According to court documents, Bankman-Fried's defense attorneys filed a notice of appeal within an hour of the judge's ruling.
The downfall of Bankman-Fried's cryptocurrency empire, which was previously valued at $32 billion, occurred last fall when prosecutors alleged that FTX had used customer deposits to cover trading losses incurred by Alameda Research, the company's trading division led by Ellison.
FTX filed for bankruptcy in November after Bankman-Fried was ousted as CEO. Ellison and another co-founder of FTX, Gary Wang, have already pleaded guilty to fraud charges and are cooperating with government officials.
