US court rules that Sam Bankman-Fried will remain in prison until trial

Bankman-Fried is charged with fraud and conspiracy arising from the collapse of the FTX cryptocurrency exchange.

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

Bankman-Fried is accused of fraud resulting from the collapse of his now bankrupt FTX exchange in November 2022, and is scheduled to go on trial on October 3.

In a written ruling, a three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said it agreed with U.S. District Judge Lewis Kaplan’s conclusion that Bankman-Fried probably tried to manipulate two witnesses.

This included sharing the personal writings of Caroline Ellison, the former managing director of his hedge fund Alameda Research, with a reporter from the New York Times.

Ellison pleaded guilty to fraud and is expected to testify against Bankman-Fried, a former romantic partner. In her writings, she described how she felt “unhappy and overwhelmed” by her work and “hurt / rejected” after the end of her relationship with Bankman-Fried.

The three justices said Thursday they were unconvinced by Bankman-Fried’s argument that Kaplan did not trust the defendant to exercise his First Amendment constitutional right to speak to the press and attempt to restore his reputation.

They wrote that Kaplan “correctly stated that if a person speaks to commit a crime, such as witness tampering, this speech falls outside the constitutional protection zone.”

Bankman-Fried faces seven fraud and conspiracy charges stemming from the collapse of FTX, the now-bankrupt cryptocurrency exchange he founded.

Prosecutors accused him of plundering billions of dollars in funds from FTX clients to cover losses at Alameda, buying luxury real estate and donating to political campaigns in the United States.

Bankman-Fried pleaded not guilty to acknowledging errors in risk management.

He also complained that the lack of Internet access at the Brooklyn Metropolitan Detention Center made it difficult for him to review evidence to prepare for the trial.

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On Thursday morning, Kaplan limited Bankman-Fried’s ability to call experts to testify at the trial.

Court documents indicated that Bankman-Fried’s lawyers would try to use the experts’ statements to substantiate the arguments that FTX’s terms of use do not prevent the use of client funds for investments – just as banks use deposits to finance loans – and the practice was common in the cryptocurrency industry.

However, Kaplan said that three proposed witnesses could not testify because their testimony was irrelevant or could confuse the jury. He also said that Bankman-Fried could try to call the four remaining experts, but only to refute the prosecution’s witnesses.

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