The founder of the now-defunct cryptocurrency exchange, FTX, Sam Bankman-Fried, was incarcerated after his $250m (£197m) bail was rescinded due to accusations of witness tampering.
On Friday, a US judge believed there was a significant chance that he tried to influence major witnesses on more than one occasion. Consequently, 31-year-old Bankman-Fried will remain in jail until his fraud trial is set for October.
His legal team has informed the New York court of their plans to challenge the judge’s decision.
Bankman-Fried, who once helmed the world’s second-biggest cryptocurrency exchange valued at $32bn, is under scrutiny for allegedly misusing client funds for high-stakes trades at a related crypto hedge fund, Alameda Research, which also saw substantial losses.
#BreakingNews Sam Bankman-Fried, the founder of the collapsed #cryptocurrency exchange #FTX, was ordered to jail on Friday after a federal judge in #NewYork revoked his bail. Now he will have to prepare for trial from a jail cell. https://t.co/RLK1YY5Flx pic.twitter.com/JkifSzo6NC
— Share_Talk ™ (@Share_Talk) August 11, 2023
FTX, facing a substantial deficit in its accounts, declared bankruptcy in November last year as customers frantically attempted to reclaim their money. This left over a million creditors in a financial lurch, with approximately 80,000 based in the UK.
While Bankman-Fried acknowledges the massive financial losses, he attributes them to mismanagement and insists he has not committed any crime. He has formally pleaded not guilty to the charges filed in the US.
This latest development followed allegations by prosecutors that Bankman-Fried had shared parts of a private journal belonging to his ex-girlfriend, Caroline Ellison, with the New York Times. Ellison, previously at the helm of Alameda Research, will likely be a central witness in the upcoming trial, having already admitted to criminal charges last year.
It is believed that by sharing these journal extracts, Bankman-Fried aimed to undermine Ellison’s credibility. Furthermore, the prosecution made a case for revoking his bail after he reportedly reached out to FTX’s chief legal officer via the messaging app, Signal.
After his extradition from the Bahamas last December to answer to fraud charges in the US, Bankman-Fried was initially under house arrest at his parent’s residence. He was subsequently released on a $250m bail, which was anchored to his parents’ California property. During this bail period, he was monitored electronically and was forbidden from accessing the assets of both FTX and Alameda.
