Sam Bankman-Fried faces potential gag order after witness-tampering allegations

By Allison Morrow and Kara Scannell | CNN

New York  — A federal judge is set to consider a gag order on former FTX CEO Sam Bankman-Fried after prosecutors accused him of leaking his former girlfriend and business partner’s personal writings to the New York Times.

Prosecutors said last week that Bankman-Fried, 31, had attempted to discredit their star witness, Caroline Ellison, who is expected to testify against Bankman-Fried at his trial in October.

US District Court Judge Lewis Kaplan was expected to rule on a so-called gag order that would prevent Bankman-Fried from discussing his case publicly. At a previous bail hearing, Kaplan alluded to the possibility of revoking Bankman-Fried’s bail deal and forcing him to await trial in jail. But he has also extended leniency on Bankman-Fried’s use of electronic devices, citing the complexity of his case.

Lawyers for Bankman-Fried responded that they would comply with a gag order but requested that it apply equally to all parties, including “the government and all potential witnesses in this case.”

Bankman-Fried was due in federal court in New York Wednesday afternoon. The bail hearing, scheduled for 2 pm ET, marks yet another pre-trial stumble for Bankman-Fried, who was released on a $250 million bond following his arrest in December. He is preparing for trial under house arrest at his parents’ Palo Alto, California, home.

In February, Judge Kaplan tightened restrictions on Bankman-Fried’s bail after prosecutors flagged a direct message Bankman-Fried sent to a former FTX employee, raising concerns about potential witness-tampering.

Since his arrest, Bankman-Fried has ignored the standard legal advice of remaining silent in the run-up to trial, frequently speaking to the media and blogging about his experience.

While his lawyers said they would comply with any gag order, they pushed back on prosecutors’ allegations of witness-tampering. In a letter to Kaplan, they argue that Bankman-Fried has a constitutional right to speak to the press, and he did so without violating the conditions of his bail agreement. Citing a “toxic” media environment that has been “almost uniformly” negative, Bankman-Fried “has a right to counter that public narrative by making fair comment in the media,” his lawyers wrote.

Bankman-Fried’s lawyers say that the article had been “in process for months” and that the reporter already had other sources.

In the article, the Times quotes from private diary entries that Ellison wrote in Google Docs. The documents reportedly detailed her “unhappy and overwhelmed” emotional state as CEO of Alameda Research, FTX’s crypto hedge fund. The writings also reportedly expressed her doubts about her ability to make decisions and effectively run the business.

Ellison, who is 28, pleaded guilty in December to multiple counts of conspiracy and fraud for her role in a scheme that led to the collapse of FTX.

Bankman-Fried, the founder of both Alameda and FTX, has pleaded not guilty to eight federal counts of fraud and conspiracy.

A trial date has been set for October 2.

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