Federal prosecutors 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.
Bankman-Fried, 30, has been under confinement at his parents’ home in Palo Alto, California, since pleading not guilty earlier this month to charges against him. He is accused of diverting massive sums of FTX customer funds to buy property, donate to politicians and finance risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.
Federal prosecutors told Kaplan that Bankman-Fried’s communications are a sign that he may be trying in influence a witness with incriminating evidence against him. As a safeguard, the prosecutors want Kaplan to revise the conditions of Bankman-Fried’s bail so he can’t communicate with current or former employees of FTX and Alameda Research outside the presence of a lawyer without a waiver from the Justice Department.
Federal prosecutors also want Kaplan to change the conditions of Bankman-Fried’s bail to prevent him from communicating through Signal, which has an auto-delete option to make messages quickly disappear in addition encryption technology to help shield the contents from outsiders. “The government cannot justify a bail condition based on an unfounded concern about what Mr. Bankman-Fried might do, when there is no evidence that he is, in fact, doing it,” Cohen said.
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