Sam Bankman-Fried’s Jail Release Bid Faces Uphill Battle, Appeals Court Raises Doubts

"Federal Appeals Court Questions Former Cryptocurrency Billionaire's Claim of Free Speech Violation Ahead of Fraud Trial"

Federal Appeals Court Questions Former Cryptocurrency Billionaire’s Argument for Release

A federal appeals court in New York expressed doubt on Tuesday regarding former cryptocurrency billionaire Sam Bankman-Fried’s claim that his pretrial detention violated his right to free speech. Bankman-Fried, who is facing federal fraud charges, had his $250 million bail revoked by U.S. District Judge Lewis Kaplan on August 11. The judge found probable cause to believe that Bankman-Fried had tampered with witnesses, including sharing personal writings of Caroline Ellison, the former CEO of his hedge fund, with a reporter from The New York Times. Ellison, who is Bankman-Fried’s former romantic partner, has pleaded guilty to fraud and is expected to testify against him.

A three-judge panel from the 2nd U.S. Circuit Court of Appeals challenged Bankman-Fried’s lawyer, Mark Cohen, on his assertion that Judge Kaplan had not adequately considered the defendant’s First Amendment right to speak with the press and restore his reputation. U.S. Circuit Judge Denny Chin questioned whether there is a First Amendment right to discredit or influence a witness who may testify against oneself. The panel did not provide a timeline for ruling on Bankman-Fried’s request for release from the Metropolitan Detention Center in Brooklyn.

Bankman-Fried is facing seven charges of fraud and conspiracy related to the collapse of FTX, the bankrupt cryptocurrency exchange he founded in November 2022. Prosecutors allege that he looted billions of dollars from FTX customer funds to cover losses at his hedge fund, purchase luxury real estate, and make political campaign donations. Bankman-Fried has pleaded not guilty to the charges, although he has acknowledged failures in risk management.

The appeals court judges appeared more receptive to Bankman-Fried’s argument that his detention violates his Sixth Amendment right to assist in his own defense. They questioned prosecutor Danielle Sassoon about the alleged inadequacies in the accommodations made by Judge Kaplan and the detention center to allow Bankman-Fried to access the internet and review the evidence against him. Sassoon argued that the government had made extraordinary efforts to assist Bankman-Fried in preparing for trial while in custody. She also pointed out that he had unrestricted internet access for seven months while on bail at his parents’ home in Palo Alto, California.

U.S. Circuit Judge William Nardini suggested that Bankman-Fried should have considered the potential loss of internet access before sharing Ellison’s writings. He stated, “If it is true that he has intimidated witnesses, at a certain point, he makes his own bed, he sleeps in it.” In a written ruling last week, Judge Kaplan noted that Bankman-Fried had not specified which pieces of evidence he was unable to access and had not requested a trial delay, despite the judge’s offer to consider one.

The appeals court’s ruling on Bankman-Fried’s release request is still pending.

Martin Reid

Martin Reid

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