FTX founder Bankman-Fried objects to tougher bail, says prosecutors ‘sandbaked’ him

NEW YORK, Jan 28 (Reuters) – Lawyers for Sam Bankman-Fried urged a U.S. judge on Saturday not to bar the indicted FTX cryptocurrency chief from communicating with former colleagues as part of his bail, saying prosecutors “ sandbaked” the process to put their client in the “worst possible light”.

The lawyers responded to a request by federal prosecutors Friday night that Bankman-Fried not be allowed to speak to most employees of FTX or his Alameda Research hedge fund without lawyers present, or use the encrypted messaging apps Signal or Slack and potentially delete messages automatically.

Bankman-Fried, 30, has been free on a $250 million bond since pleading not guilty to fraud charges in the looting of billions of dollars from the now-bankrupt FTX.

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

But in a letter to U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried’s attorneys said prosecutors triggered the “overbroad” bail conditions without disclosing that both sides had discussed bail in the past week.

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

Bankman-Fried’s lawyers also said their client’s attempts to contact the general counsel and John Ray, installed as FTX’s chief executive during the bankruptcy, were attempts to offer “assistance” and not to interfere.

A spokesman for U.S. Attorney Damian Williams in Manhattan declined to comment.

Bankman-Fried’s lawyers suggested their client be allowed access to some colleagues, including his therapist, but not be allowed to speak to Caroline Ellison and Zixiao “Gary” Wang, who have pleaded guilty and are cooperating with prosecutors.

They said a signal ban is not necessary because Bankman-Fried does not use the auto-delete feature, and the concern he may have is “unfounded.”

The attorneys also asked to remove a bail condition preventing Bankman-Fried from accessing FTX, Alameda or cryptocurrency assets, saying there was “no evidence” that he was responsible for previously alleged unauthorized transactions.

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

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

Reporting by Jonathan Stempel in New York; Editing by Andrea Ricci

Our standards: Thomson Reuters Trust Principles.

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