A judge has revoked the bail of Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX. Judge Lewis Kaplan said he found "probable cause to believe" the former crypto mogul "tried to tamper with witnesses at least twice."
Kaplan said in court on Aug. 11 he believed Bankman-Fried had committed the federal crime of attempted witness tampering by sending an encrypted communication to FTX's general counsel in January, and more recently by sharing his former girlfriend's journal with a reporter, AP News reported. The judge expressed his belief that Bankman-Fried had attempted to influence witnesses in his upcoming trial to pressure them to "back off, to have them hedge their cooperation with the government.”
Kaplan said the 31-year-old, who is accused of defrauding investors and illegally misusing millions of dollars of FTX customer funds, has overstepped the boundaries of his $250 million bail package to the point that he threatens the safety of witnesses and must be sent to jail until his October trial, AP News reported. Bankman-Fried reportedly left the courtroom in handcuffs.
Caroline Ellison, Bankman-Fried's former girlfriend whose diary Bankman-Fried shared with the New York Times, pleaded guilty to multiple criminal charges in December and has agreed to testify against Bankman-Fried, AP News reported. Ellison was formerly the CEO of the hedge fund Alameda Research, one of Bankman-Fried's businesses. Kaplan said the portions of Ellison's diary Bankman-Fried shared with the New York Times were of a nature that a former romantic partner "would be very unlikely to share with anybody, lest The New York Times, except to hurt, discredit and frighten the subject of the material.”
Last month, a Bitcoin.com analyst had expressed concern about "double standards" in enforcement in the crypto industry after prosecutors decided not to pursue a campaign finance violation charge against Bankman-Fried. Ben Friedman wrote in an opinion piece on Bitcoin.com that although Bankman-Fried allegedly illegally directed more than $100 million from the hedge fund Alameda Research to hundreds of recipients, he seemed to be receiving “cushy treatment," Federal Newswire previously reported.
"It’s hard not to notice the different enforcement priorities when it comes to cryptocurrency exchanges," Friedman wrote. "While exchanges like Binance and Coinbase faced regulatory action, FTX seems to have dodged similar consequences despite the serious allegations against its founder. This inconsistency makes us wonder if all crypto exchanges are held to the same standards."
In June, the SEC filed lawsuits against major crypto exchanges Binance and Coinbase. Financial analyst Matt Levine wrote in his "Money Stuff" newsletter that after reviewing the complaints against both companies, the SEC is simply accusing the firms of operating cryptocurrency exchanges.
“I am tempted to read yesterday’s lawsuit as kind of an endorsement of Binance by the SEC,” Levine wrote. “The SEC, and before it the CFTC, investigated Binance carefully and wrote a 136-page complaint about every bad thing it could find, and all it could find is that Binance is running a crypto exchange.”
Summing up the SEC lawsuits, the Bloomberg analyst concluded, “For the most part the Binance complaint is the same as the Coinbase complaint: Binance is accused of operating a crypto exchange that was open to U.S. customers and that listed crypto tokens that are securities, without registering as a U.S. securities exchange.”
"Just being a crypto exchange in the U.S. is, in the SEC’s eyes, illegal,” Levine said.
