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Sam Bankman-Fried, the founder of FTX, has been ordered to be imprisoned before his criminal trial. This decision was made by U.S. District Judge Lewis A. Kaplan, who sided with federal prosecutors and claimed that Bankman-Fried had engaged in tampering with witnesses and violated the terms of his bail. As a result, Bankman-Fried was handcuffed and escorted out of the courtroom, and he will remain in a federal detention center in Brooklyn until his trial on October 2nd. This development comes after Bankman-Fried, currently 31 years old, had been under house arrest at his parents' home since December, following extradition from the Bahamas. He had been accused of defrauding investors through his now-defunct cryptocurrency exchange.
The stricter conditions of Bankman-Fried's bail had been implemented leading up to the ruling, but it was ultimately his communication with the media that sealed his detainment. In July, he shared private diary entries belonging to his former partner, Caroline Ellison, who is also the CEO of the trading company they co-founded, with a reporter from the New York Times while at his parents' residence in California. Prosecutors have deemed this leak as an effort to intimidate a witness and considered the resulting article published on July 20th as pivotal in their push to revoke Bankman-Fried's bail.
Despite opposition from the New York Times and the Reporters Committee for Freedom of the Press, who argued against his imprisonment, Bankman-Fried was detained. They claimed that detaining him would infringe upon his freedom of speech. Bankman-Fried's defense attorneys contended that he had a First Amendment right to protect his reputation, emphasizing that there was no restraining order prohibiting him from speaking to the media.
Bankman-Fried's cryptocurrency empire, once valued at $32 billion, collapsed in the fall when prosecutors alleged that FTX had utilized customer deposits to compensate for the trading losses incurred by Alameda Research, the company's trading arm managed by Ellison. Following Bankman-Fried's removal as CEO, FTX filed for bankruptcy in November. In a separate development, both Ellison and Gary Wang, another co-founder of FTX, have already pleaded guilty to fraud charges and are cooperating with government authorities.