Federal prosecutors have urged U.S. District Judge Lewis Kaplan to modify Sam Bankman-Fried’s bond agreement, saying the disgraced crypto mogul may have engaged in “witness tampering” by sending encrypted messages to a potential witness.
In a four-page filing put forward Friday, prosecutors said Bankman-Fried had tried to contact “the current General Counsel of FTX US” through the encrypted messaging application Signal and email on January 15. While identified in the filing only as “Witness-1,” Ryne Miller is FTX US’s current counsel.
“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,” U.S. prosecutors allege Bankman-Fried wrote.
Prosecutors said Bankman-Fried has tried to contact other current and former employees of FTX as well. And his desire to “vet things” with Miller suggests an effort to influence the testimony of potential witnesses, they argued.
As a result, the filing called for preventing Bankman-Fried from reaching out to current or former employees of FTX and those at his trading firm Alameda Research—unless he is joined by a lawyer or granted permission by the government. As prosecutors note, this is not an uncommon pre-trial restriction.
The filing also asked Judge Kaplan to prevent Bankman-Fried from using “any encrypted or ephemeral call or messaging application, including but not limited to Signal.”
Prosecutors said that banning Bankman-Fried from encrypted communications channels would prevent obstruction of justice, as Alameda CEO Caroline Elison–who has pleaded guilty to financial crimes and is cooperating with investigations into the collapse of FTX–told them that Bankman-Fried was aware of the ramifications of the automatic deletion of messages on platforms like Signal and Slack.
“Many legal cases turn on documentation and it is more difficult to build a legal case if information is not written down or preserved,” Bankman-Fried had indicated to Elision, prosecutors said.
It wouldn’t be the first time Bankman-Fried’s bond agreement was changed. Bankman-Fried was prohibited from accessing or transferring funds related to FTX or Alameda after a request was made at his arraignment earlier this month, where he pled not guilty to a series of financial crimes.
In response, Bankman-Fried’s lawyers submitted a letter on Saturday opposing the prosecutors’ request, outlining their own version of restrictions that could be placed on communications for Bankman-Fried instead.
“The Government’s proposal that Mr. Bankman-Fried be barred from any contact with former or current FTX employees without counsel present is simply unworkable,” it stated. “For example, it would mean that Mr. Bankman-Fried could not speak to his therapist, who is a former FTX employee, without the participation of his lawyers.”
While Bankman-Fried’s legal team called the restrictions proposed by prosecutors “overbroad,” they did propose prohibiting him from contacting some current and former employees of FTX and Alameda entirely, including Ellison, Zixiao “Gary” Wang, and Nishad Singh, among others.
Bankman-Fried’s lawyers also said the evidence put forth by federal prosecutors does not warrant the proposed restrictions because their defendant's attempt to reach out to Miller was “merely an innocuous attempt to offer assistance in FTX’s bankruptcy process and does not reflect misconduct.”
Additionally, the messages sent by Bankman-Fried to Miller did not have the auto-delete function enabled and were also sent via email, evidence that Bankman-Fried was not trying to evade detection, his lawyers argued.
“In fact, Mr. Bankman-Fried has turned off the disappearing messages function on his Signal account and is not sending any Signal or Slack messages with auto-delete features,” Bankman-Fried’s lawyers said.
Finally, Bankman-Fried’s legal team said the condition of his bail barring him from transferring funds related to FTX or Alameda should be removed because the basis “for seeking that condition has not been supported” nearly three weeks later.
In a court order filed later on Saturday, Judge Kaplan outlined the proper ways for each legal team to respond to the letters put forth and ordered federal prosecutors to submit “complete copies” of the alleged communications between Miller and Bankman-Fried.