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Cryptocurrency Exchange FTX Founder Appeals Pre-Trial Imprisonment

Sam Bankman-Fried, the founder of FTX, is appealing against a judge's decision to imprison him ahead of his trial over the collapse of the cryptocurrency exchange, arguing it infringes on his First Amendment rights.

Sam Bankman-Fried
Sam Bankman-Fried

Appealing Against Pre-Trial Imprisonment

Sam Bankman-Fried, founder of the collapsed FTX cryptocurrency exchange, has appealed a decision to jail him before his Oct. 3 trial, asserting that this action is a punishment for exercising his First Amendment right to free speech. On Aug. 11, U.S. District Judge Lewis Kaplan revoked the 31-year-old former billionaire's bail after finding probable cause to believe he tampered with witnesses. This followed an incident where Bankman-Fried shared personal writings of his former colleague and romantic partner, Caroline Ellison, from before the FTX's November 2022 collapse, with a New York Times reporter. Ellison, who has pleaded guilty to fraud, is one of three former members of Bankman-Fried's inner circle expected to testify against him.

Defending Reputation or Intimidating Witnesses?

In a motion for Bankman-Fried's release from jail filed with the U.S. 2nd Circuit Court of Appeals, his lawyers argued that sharing Ellison's writings was intended to defend his reputation, not to intimidate her. They questioned how a cooperating witness, who has promised to testify against a defendant, could be meaningfully threatened by the publication of their statements in a reputable newspaper. Meanwhile, prosecutors accused Bankman-Fried of stealing billions of dollars in customer funds to cover losses at Alameda Research, a crypto-focused hedge fund he also owned and where Ellison was chief executive. Bankman-Fried has pleaded not guilty to the charges.

Detention Center Conditions Interfere with Trial Preparation

The defense argued that confining Bankman-Fried in Brooklyn's Metropolitan Detention Center, which has been widely criticized for its conditions, interfered with his constitutional right to prepare for trial. At an Aug. 22 court hearing, his lawyers objected to the jail's failure to provide him with Adderall for his attention deficit hyperactivity disorder or serve him vegan food, causing him to subsist on bread, water, and peanut butter. They also claimed the jail did not allow Bankman-Fried adequate computer time to review evidence and prepare his defense.

Harassment or Dissuasion?

In her writings, Ellison described feeling "unhappy and overwhelmed" with her job and "hurt/rejected" from her breakup with Bankman-Fried. Prosecutors contended that Bankman-Fried shared Ellison's writings to harass her and to dissuade others from testifying if they believed he would publicize information that would make them look bad in the press.