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Breaking Sam Bankman-Fried Headed to Jail for Alleged Witness Intimidation

3 mins
Updated by Michael Washburn
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In Brief

  • The news broke on Friday afternoon that Sam Bankman-Fried, who has long fought incarceration, has lost his battle.
  • Government lawyers accuse the FTX founder of having intimidated Caroline Ellison, who is set to testify at his October trial.
  • But even members of the very news organizations that reported on FTX's malfeasance question the zeal to lock him up.
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The efforts of Sam Bankman-Fried’s legal team to keep him out of prison have failed. On Friday afternoon, a judge’s decision required the former high-flying crypto entrepreneur to report to jail.

A federal judge in Manhattan, Lewis A. Kaplan, made the decision to cut short the house arrest under which Bankman-Fried had been living pending his trial. The basis for the ruling was alleged witness intimidation, which Bankman-Fried committed by handing over to reporters the private diary entries of former Alameda Research CEO (and his former girlfriend), Caroline Ellison.

Sam Bankman-Fried’s Leaking of Documents

The Google documents that Bankman-Fried shared with a New York Times reporter formed the basis for a July 20 article. Its title? “Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case.”

The article is every bit as sensational as its title makes it sound. Among the quotations from the diary entries that Ellison believed she was writing in privacy, not for public consumption, are such admissions as:

“I have been feeling pretty unhappy and overwhelmed with my job. At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”

In this entry, Ellison does not sound like an accomplished, confident CEO, but someone in way over her head. Another entry states, “It really doesn’t feel like there’s an end in sight.”

And in yet another entry quoted in the same article, she writes that breaking up with him “significantly decreased my excitement about Alameda.”

Prosecutors argue that the leaking of such documents was an attempt to intimidate a witness in the coming trial. Bankman-Fried also talked with author Michael Lewis for a book the latter is writing.

But some, including members of the New York Times staff, have defended Bankman-Fried on free speech grounds. They do not look good when a source who brought them evidence to report ends up in handcuffs.

More importantly, intimidation is a two-way street. Locking someone up for talking to the press can have profoundly chilling and damaging effects on the flow of information in a putatively free society.

An Avalanche of Bad News for Bankman-Fried

It has not been the finest week of Sam Bankman-Fried’s life. On Tuesday, after having dropped campaign finance fraud charges, government lawyers announced that they would pursue the defendant on those grounds. In addition to wire fraud and lying to investors.

Prosecutors had originally dropped the campaign finance-related charges. The Bahamas did not include such alleged offenses as grounds for its extradition of Bankman-Fried to the United States.

So the legal reasoning for now pursuing the charges, and flouting the terms of the treaty under which the extradition took place, is still unclear.

But then, consistent logic has never been a strong suit in the government’s vendetta against Bankman-Fried. Some may contrast Friday’s decision to lock him up pending trial with the light touch applied to Elizabeth Holmes, founder and former CEO of Theranos. And may see a pernicious double standard at work.

Holmes did not have to await trial in jail, even after having lied to investors, the public, and the media, not to mention patients with highly sensitive medical conditions, about the efficacy of her company’s blood tests.

Or even after fostering an atmosphere of intimidation and deceit at her firm. One that some blame for the suicide of biochemist Ian Gibbons.

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Michael Washburn
Michael Washburn is a New York-based managing editor who joined BeInCrypto in March 2023. Over his career, he written extensively about the corporate legal world and the intersection of finance and law, has produced thousands of articles and features, and has mentored many reporters and researchers finding their way in a fast-changing industry.
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