As a federal judge showed growing impatience Thursday with Sam Bankman-Fried’s potential for witness tampering with his continued use of the internet, he also noted the “extraordinary” privilege the disgraced FTX founder has enjoyed by being able to live in his parents’ Stanford home while he awaits trial on charges related to what prosecutors have called “one of the biggest financial frauds in American history.”
“Your client is at liberty on extraordinary conditions,” U.S. District Court Judge Lewis A. Kaplan told Bankman-Friend’s attorneys in Manhattan Thursday, according to reports from inside the courtroom. Kaplan was referring to the one-time billionaire being free on $250 million bond, after being accused of cheating investors and stealing from customer deposits at FTX, his cryptocurrency trading platform.
WATCH: Sam Bankman-Fried arrives for a hearing on his bail conditions in federal court in Manhattan. pic.twitter.com/wWLmswBEz2
— Bloomberg TV (@BloombergTV) February 16, 2023
This historically high bond has kept the 30-year-old out of federal lock-up and allowed him to stay in the cozy, five-bedroom home belonging to his Stanford Law professor parents, where he’s had access to electronic devices that, prosecutors say, have led to multiple violations of the terms of his release.
At Thursday’s hearing, Kaplan expressed skepticism that Bankman-Fried could be trusted as he sat in the courtroom. Kaplan suggested that the alleged fraudster had already exploited the conditions of his home confinement by making contact with potential witnesses in order to influence their testimony, the Los Angeles Times reported.
Bankman-Friend, who generally can’t leave his parents’ home and must wear a GPS monitor strapped to his ankle, “has done things that suggest to me that maybe he has committed or attempted to commit a federal felony while on release,” Kaplan said. The judge pointedly asked prosecutors why they have not asked for his bail to be revoked. Thus far, prosecutors have only sought to tighten the terms of Bankman-Friend’s home confinement by limiting his use of cellphones, tablets, computers and the internet to helping prepare for his defense.
“You’re putting an awful lot of trust in him, aren’t you?” Kaplan said. He raised the possibility that jail might be the only way to ensure that the technologically sophisticated Bankman-Fried won’t try to outsmart the government by using electronic devices in ways that can’t be tracked, the Associated Press said. “There is a solution, but it’s not one anybody’s proposed yet,” Kaplan said.
Kaplan also pointed out that there would be devices around the house that the government wouldn’t be tracking, belonging to his professor parents, Joseph Bankman and Barbara Fried. “Why am I being asked to set him loose in this garden of electronic devices?” he asked prosecutors.
Assistant U.S. Attorney Nicolas Roos replied that a more “drastic alternative” would be to ban Bankman-Fried’s use of all electronic devices, but said the government is concerned about Bankman-Fried’s ability to prepare for trial, which is scheduled for October.
Kaplan scoffed at the idea that the First Amendment gives people a right to access the internet and said defendants in custody are still able to prepare for their defense without being online. The judge also dismissed defense claims that Bankman-Fried only used a virtual private network, or VPN, to watch the Super Bowl and other NFL games.
When Bankman-Fried’s attorney Mark Cohen said that “Watching the Super Bowl wasn’t an attempt to get around the court’s conditions,” Kaplan replied that his client knew that using a VPN, a technology that makes it possible to conceal internet activity, was a violation of the court’s conditions. He also asked, “Why was he watching the Super Bowl on a VPN when it’s on free TV for everyone?”
This court hearing about Bankman-Fried’s internet use comes after it was revealed Wednesday that his bond was backed by two Stanford colleagues of his parents, CNN reported. Stanford Law School dean emeritus Larry Kramer signed a bond pledging to pay $500,000 if Bankman-Fried violated the terms of his bail, while Stanford Senior Research Scientist Andreas Paepcke signed a bond for $200,000. Bankman-Friend’s bond initially was secured by his parents’ faculty home, which is on land that they rent from Stanford.
Meanwhile, legal experts and members of the general public continue to express dismay over Bankman-Fried remaining free on bond. Law & Crime network managing editor Adam Klasfeld shared a Feb. 9 letter that a private citizen sent to Kaplan, asking why he doesn’t just revoke Bankman-Fried’s bail, if he and prosecutors are so worried about his communications.
“It’s really amazing that he’s holding court with reporters, friends and others in the luxury of his parents’ house, after causing historical and stunning losses to thousands of poeple, and no one is sure he isn’t deleting communications and sending encrypted messages,” the person wrote, concluding: “Money does talk.”
Alison Siegler, a professor at the University of Chicago Law School, agreed that Bankman-Fried’s continued house arrest — even after the repeated violations of his release — reflects a pattern of judges and prosecutors “treating privileged people and those charged with white-collar offenses differently than those without means or status,” she told the Los Angeles Times.
“In the 20 years I’ve spent as a federal public defender … I can’t recall a single case where the government levied these kinds of serious allegations and then asked the judge to keep a client out, rather than moving to revoke the bond and lock the client in jail,” Siegler told the Times.
In interviews that Bankman-Fried has given from his parents’ home, which is surrounded by 24/7-security that his parents have paid for, the former entrepreneur tried to portray himself as “repentant” but also adamant he did nothing illegal. About home confinement, Bankman-Fried told Puck writer Theodore Schleifer in January that he spends his days going “stir-crazy,” playing video games, “voraciously consuming Twitter,” and studying up on federal wire-fraud laws ahead of his trial, Schleifer said.
“It doesn’t feel like being bored during a vacation,” Bankman-Fried said. “It feels simultaneously, very antsy and frustrating and stressful. And a lot of trying to find anything I can do, to the extent there is anything. But what I can do is limited.”
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