The incarcerated founder of the now-defunct cryptocurrency exchange FTX has had his $250m (£197m) bail revoked due to allegations of witness tampering. Sam Bankman-Fried, 31, was taken into custody on Friday after a US judge deemed it probable that he had attempted to interfere with crucial witnesses on multiple occasions. Consequently, Bankman-Fried will have to await his forthcoming fraud trial, scheduled for October, behind bars. His legal team has expressed an intention to appeal this decision in a New York court.
The disgraced FTX founder stands accused of misappropriating funds from customer deposits to support a volatile trading venture at sister cryptocurrency hedge fund Alameda Research, which also suffered significant losses. FTX, once valued at $32bn and the world’s second-largest digital coin exchange, filed for bankruptcy last November, leaving over one million creditors, including an estimated 80,000 in the UK, at a loss.
Bankman-Fried has attributed the massive losses to incompetence and maintains his innocence in the face of US charges. Prosecutors recently alleged that he provided selected excerpts from his ex-girlfriend Caroline Ellison’s private diary to the New York Times. Ellison, the former CEO of Alameda Research, had previously pleaded guilty to criminal charges and is expected to testify as a key witness in the upcoming trial. Prosecutors argue that Bankman-Fried leaked the diary entries in an attempt to discredit her.
In addition to this, prosecutors claimed that Bankman-Fried contacted the general counsel for FTX via private messaging app Signal earlier this year, prompting them to argue for the revocation of his bail. Since being extradited from the Bahamas and facing fraud charges in the United States, Bankman-Fried had been under house arrest, residing with his parents. He was released from federal custody on a $250m bail, secured against his parents’ California home. The bail conditions imposed stringent restrictions on the cryptocurrency magnate, including electronic surveillance and a prohibition on accessing FTX and Alameda assets.
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