U.S. District Court Judge Lewis Kaplan on Friday worried about whether restrictive communications for Sam Bankman-Fried would be sufficient, concerns that raised questions again about whether the FTX founder could have his bail revoked and get sent back to jail as he awaits the trial currently set for the fall.
Kaplan voiced the worries about the restrictive communications for Bankman-Fried’s bail terms during a conference held in Manhattan federal court Friday morning. The FTX founder did not appear for the hearing, one at which his presence was not mandatory.
Friday’s conference comes a week after both parties in the case offered new rules on Bankman-Fried’s tech usage to make it more restrictive following reported virtual private network (VPN) usage on Bankman-Fried’s part. Kaplan had previously suggested he was potentially ready to send the FTX founder back to prison if they couldn’t find a solution.
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"The broad conclusion that I think I’ve reached – and it’s provisional – is, even if we do all of these things and even if we modify to address a series of questions that I still have, there’s no 100% guarantee possible in the sense that given the nature of the nature of the restrictions" that the defendant wouldn’t break the rules again, Kaplan said Friday.
"If he is determined and inventive – I suspect he is very inventive and technologically savvy – he could find a way around it and conceivably not get caught," he added.
Assistant U.S. attorney Nicolas Roos said "we do not disagree" when the judge asked the parties if either disagreed with his "overall conclusion."
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Defense attorney Christian Everdell acknowledged "it is hard to give the court a 100% guarantee with any sort of bail restrictions." However, he argued they are still proposing to restrict Bankman-Fried’s access and usage in a way that is "extraordinarily meaningful and that can be tracked and, if there is a violation, can also reveal the violation very easily."
Under the conditions proposed a week ago, attorneys suggested barring encrypted or ephemeral apps and limiting virtual private networks. The proposal also included restricting Bankman-Fried to text messages and calls on a non-smartphone, among other things, as FOX Business previously reported.
On Friday, Kaplan, without ever verbally saying whether he was going to send Bankman-Fried back to jail, ultimately delayed any decision, giving directions to tighten the conditions for his bail.
Discovery and what the timeline for handing it over would be was also discussed at the hearing.
According to the government, some subpoenas are still outstanding, which Roos at one point said "would relate to potentially unindicted co-conspirators of the defendant." Investigations are also continuing, the government said in court.
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To date, Bankman-Fried has been hit with a total of 12 charges, including counts of wire fraud, wire fraud conspiracy, money laundering conspiracy, commodities fraud conspiracy, securities fraud conspiracy and other more recent ones. He was first indicted and extradited from the Bahamas back in December.
Prosecutors have accused Bankman-Fried of a "scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds," according to a Department of Justice press release.
He received the charges – to which he has pleaded not guilty – in the wake of the rapid collapse in November of FTX, formerly one of the largest cryptocurrency exchanges in the world. It was once valued at $32 billion but has been undergoing Chapter 11 bankruptcy proceedings for months.
Breck Dumas and Greg Wehner contributed to this report.
