FTX founder Bankman Fried objects to tougher bail, prosecutors say ‘put him in a sandbag’

NEW YORK (Reuters) – Attorneys for Sam Bankman-Fried urged a U.S. judge on Saturday not to block the accused FTX cryptocurrency executive from contacting former colleagues as part of his bail release, saying prosecutors had “sandbagged” their placement process. The client is in the “worst possible light”.

The lawyers were responding to a request Friday night by federal prosecutors not to allow Bankman Fried to speak with most employees of FTX or its Alameda Research hedge fund without attorneys present, or to use encrypted messaging apps Signal or Slack and potentially delete messages automatically.

Bankman-Fried, 30, has been released from $250 million in bonds since he pleaded not guilty to fraud charges in plundering billions of dollars from the now-bankrupt FTX.

Prosecutors said their request was in response to recent efforts by Bankman-Fried to contact a potential witness against him, the general counsel of an FTX subsidiary, and was necessary to prevent witness tampering and obstruction of justice.

But in a letter to U.S. District Judge Louis Kaplan in Manhattan, Bankman-Fried’s attorneys said plaintiffs called the bail terms “loose” without disclosing that the two sides had been discussing bail for the past week.

“Rather than await any response from the defense, the government sandbagged the process, presenting this letter at 6:00 p.m. on Friday,” Bankman-Fried’s attorneys wrote. “The government apparently believes that a one-sided presentation – which is being spun to put our client in the worst possible light – is the best way to get the result it seeks.”

Bankman-Fried’s attorneys also said their client’s efforts to contact the general counsel and John Ray, who was named CEO of FTX during the bankruptcy, were attempts to offer “help” rather than intervention.

A spokesman for US Attorney General Damian Williams in Manhattan declined to comment.

Bankman-Fried’s attorneys have suggested that their client have access to some associates, including his handler, but not be allowed to speak with Carolyn Ellison and Zixiao “Gary” Wang, who have pleaded guilty and are cooperating with prosecutors.

They said banning the mention was not necessary because Bankman-Fried does not use the auto-delete feature, and the concern that it might be “unfounded”.

The lawyers also asked that the bail clause barring Bankman-Fried from accessing FTX, Alameda’s or cryptocurrency assets be revoked, saying there was “no evidence” that it was responsible for past unauthorized transactions.

In Saturday’s order, Kaplan gave prosecutors until Monday to address Bankman-Fried’s concerns.

“The court expects all lawyers to refrain from pejorative characterizations of their opponents’ actions and motives,” the judge added.

(Reporting by Jonathan Stempel) in New York. Editing by Andrea Ricci

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