FTX founder Bankman-Fried to remain behind bars until trial

• US appeals court upholds decision to deny bail to Sam Bankman-Fried, former crypto billionaire.
• Bankman-Fried is facing fraud charges related to the collapse of his FTX exchange in November 2022.
• Bankman-Fried is scheduled to go on trial on October 3.

An appeals court in the United States has upheld a decision to deny bail to Sam Bankman-Fried, a former cryptocurrency billionaire, and to keep him in custody until his trial.

Bankman-Fried is facing fraud charges related to the collapse of his FTX exchange in November 2022, which led to bankruptcy. His trial is scheduled for October 3.

The 2nd US Circuit Court of Appeals in Manhattan, composed of three judges, issued a written decision concurring with the earlier ruling by US District Judge Lewis Kaplan.

Judge Kaplan had determined that Bankman-Fried likely attempted to influence two witnesses, one of whom is Caroline Ellison, the former CEO of his Alameda Research hedge fund.

Bankman-Fried shared Ellison’s writings with a reporter from The New York Times.

Ellison, who had pleaded guilty to fraud, is expected to testify against Bankman-Fried in court. In her writings, she expressed dissatisfaction with her job and emotional distress following the end of her romantic relationship with Bankman-Fried.

Judge Kaplan had revoked Bankman-Fried’s $250 million bail on August 11. The three appeals court judges stated that they were not convinced by Bankman-Fried’s argument that Judge Kaplan had failed to acknowledge his exercise of First Amendment rights to speak with the press and attempt to restore his reputation.

Bankman-Fried is facing seven charges of fraud and conspiracy in connection with the collapse of FTX, the crypto exchange he founded, which is now bankrupt.

Prosecutors allege that he embezzled billions of dollars from FTX customers to cover losses at his Alameda firm, purchase high-end real estate, and make donations to US political campaigns.

Despite pleading not guilty, Bankman-Fried has acknowledged failures in risk management. He has also raised concerns about the lack of internet access at the Metropolitan Detention Center in Brooklyn, making it difficult for him to review evidence for trial preparation.

Earlier on the same day, Judge Kaplan imposed limitations on Bankman-Fried’s ability to call expert witnesses during the trial.

Court documents indicated that Bankman-Fried’s legal team planned to use expert testimony to support their argument that FTX’s terms of service did not explicitly prohibit the use of customer funds for investments, a practice akin to how banks utilize deposits for loans.

This argument aimed to show that such a practice was common in the cryptocurrency industry.

However, Judge Kaplan ruled out three proposed expert witnesses, deeming their testimony irrelevant or potentially confusing to the jury.

He left open the possibility for Bankman-Fried to call the remaining four experts but only for the purpose of rebutting the prosecution’s witnesses.