HomeCryptocurrencyFTX Founder Sam Bankman-Fried in Custody After Bail Revoked Amid Leaks

FTX Founder Sam Bankman-Fried in Custody After Bail Revoked Amid Leaks

A US federal judge issued an order on Friday that mandates the return of Sam Bankman-Fried, the founder of FTX, to incarceration after allegations from prosecutors that he breached the terms of his bail and tampered with witnesses. This development comes less than two months ahead of his scheduled trial.

At the age of 31, Bankman-Fried has entered a plea of not guilty in response to charges of wire fraud, conspiracy to commit money laundering, and violations related to election finance. These charges are linked to his involvement with the dramatic downfall of his cryptocurrency company.

US District Judge Lewis Kaplan has directed that Bankman-Fried be returned to federal custody based on a finding of “probable cause… that the defendant has committed the federal crime of attempted witness tampering,” as detailed in the court’s ruling.

Prosecutors have contended that Bankman-Fried’s activities as a source for The New York Times could be considered as intimidation of witnesses. They have highlighted an article containing private content from Caroline Ellison, a former employee of Alameda Research, with whom Bankman-Fried had a romantic relationship. Ellison is cooperating as a witness in the government’s case.

The upcoming trial for Bankman-Fried is scheduled for early October.

FTX and its affiliated trading entity, Alameda Research, underwent bankruptcy proceedings in November, leading to the dissolution of a virtual trading enterprise that had once garnered a market valuation of $32 billion.

Prosecutors assert that Bankman-Fried, who was initially released on bail amounting to $250 million and confined to his parents’ residence in California, engaged in fraudulent activities that deceived investors and misused funds belonging to FTX and Alameda Research clients.

The former head of FTX had achieved considerable media attention, being featured on the covers of financial and technology magazines. Comparisons to Warren Buffett were drawn, and substantial investments were attracted from prominent fund managers and venture capitalists.

However, this positive narrative took a sharp turn when reports emerged revealing that Alameda’s financial foundation heavily relied on a token created by FTX, lacking independent value. This revelation exposed the precarious interdependence of Bankman-Fried’s companies and ultimately led to their downfall.

Following his arrest on December 12 at his Bahamas residence, where he holds permanent residency, Bankman-Fried spent nine days in custody. After careful deliberation, he chose not to contest extradition to the United States at the request of federal prosecutors in New York.

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