SBF could be locked up if he continues encryption use

A Manhattan federal judge on Thursday suggested he’d lock disgraced FTX founder Sam Bankman-Fried up pending trial if the accused fraudster continues to improperly use electronic devices while out on bail.

Judge Lewis Kaplan asked federal prosecutors and Bankman-Fried’s attorneys why he should allow the alleged crypto crook to return to his parents’ California house, where he’d be surrounded by unmonitored electronic devices.

“There is a solution but it’s not one anyone has proposed yet,” Kaplan said at the hearing, referring to the possibility of ordering Bankman-Friend detained after it was revealed he used an encrypted app to message an FTX employee.

The judge noted there may be probable cause to believe Bankman-Fried committed a federal felony while on pre-trial release, “namely witness tampering or attempted witness tampering.”

“Why am I being asked to turn him loose in this garden of electronic devices?” Kaplan added.

Prosecutors did not seek Bankman-Fried’s detention at the hearing, but suggested more strict bail conditions that would essentially bar him from using all computers except while preparing for trial.

Prosecutors and Bankman-Fried’s defense attorneys will submit proposed conditions in the next week. Until then, Kaplan will extend an order limiting the accused fraudster’s access to electronics.

Thursday’s hearing came after federal prosecutors discovered Bankman-Fried had contacted a potential trial witness on the encrypted app Signal and used a virtual private network — or VPN – to access the internet. 

Bankman-Fried’s use of encryption methods first came to light at the end of January, when prosecutors told Kaplan the shaggy-haired accused fraudster used Signal on Jan. 15 to message the general counsel of his former cryptocurrency exchange platform. 

Advertisement

Advertisement

In response, Kaplan banned Bankman-Fried from communicating with current or former employees of the company — and ordered that he not use “any encrypted or ephemeral call or messaging application.” 

Since that Feb. 1 order, prosecutors discovered Bankman-Fried used a VPN to access the internet at least twice, including on Feb. 12.

Bankman-Fried claimed he used the VPN to access an NFL Game Pass subscription he bought when he was living abroad in the Bahamas so he could watch playoff football games, including the Super Bowl. 

Prosecutors, in a letter filed Wednesday, urged Kaplan to impose stricter bail conditions on Bankman-Fried — arguing he did not need to use a VPN to watch the NFL. 

“An international subscription to NFL Game Pass was not necessary to watch the Super Bowl; it was, for instance, on cable TV, free over the air using an antenna, viewable on the Fox Sports app for free, and also was streamed in the US on some secondary websites,” they wrote.