A judge has ruled that FTX founder Sam Bankman-Fried should be imprisoned before his criminal trial. The decision was made in favor of federal prosecutors who claimed that Bankman-Fried had engaged in witness tampering and violated the conditions of his bail.
Following the ruling by U.S. District Judge Lewis A. Kaplan, Bankman-Fried was handcuffed and taken out of the courtroom. He will remain at a federal detention center in Brooklyn until his trial on October 2, as stated in the order.
Since December, the 31-year-old has been confined to his parents' residence in California after being extradited from the Bahamas on charges of defrauding investors through his now-defunct cryptocurrency exchange.
The conditions of Bankman-Fried's bail had been tightened leading up to the ruling, but it was ultimately his interaction with the media that resulted in his detention.
In July, he shared private diary entries belonging to Caroline Ellison, his former romantic partner and the CEO of the trading firm they co-founded, with a reporter from the New York Times at his parents' residence in California. Prosecutors have characterized this leak as an act of witness intimidation and described the article published on July 20 as the turning point in their efforts to revoke Bankman-Fried's bail.
Both the New York Times and the Reporters Committee for Freedom of the Press argued against imprisoning Bankman-Fried, submitting letters that claimed his detention would infringe upon his freedom of speech.
Bankman-Fried's defense attorneys contended that he had a First Amendment right to restore his reputation and pointed out that there was no gag order preventing him from speaking to the media.
Within an hour of the judge's decision, Bankman-Fried's defense attorneys filed a notice of appeal, according to court documents.
The downfall of Bankman-Fried's cryptocurrency empire, previously valued at $32 billion, occurred last autumn when prosecutors alleged that FTX had utilized customer deposits to cover trading losses incurred by Alameda Research, the company's trading division led by Ellison.
FTX filed for bankruptcy in November after Bankman-Fried was removed as CEO. Ellison and another FTX co-founder, Gary Wang, have already pleaded guilty to fraud charges and are cooperating with government officials.