On Wednesday, US District Judge Lewis Kaplan ordered that Sam Bankman-Fried was no longer permitted to use encrypted communications with employees of FTX and Alameda Research.
The restrictions came after prosecutors had claimed on Friday that the co-founder of FTX and Alameda had used Signal, an encrypted messaging platform, earlier this month to reach out to a potential witness in an attempt to develop a favorable relationship.
On February 7th, the court will allow both legal teams to present their arguments in favor of and against the measure, which had originally been submitted as a bail modification.
However, a recent filing disclosed that Judge Kaplan considered it quite clear and sufficient to restrict the disgraced crypto mogul until they can make a further determination.
According to federal prosecutors, such moves from Sam Bankman-Fried are quite similar to ‘witness tampering’ because he had contacted the general counsel of FTX’s US subsidiary.
The prosecutors did not name him but said that the individual had close knowledge of SBF’s conduct that led to the collapse of the crypto exchange last year in November.
US prosecutors identified the individual as ‘Witness-1’ and said that Sam Bankman-Fried had attempted to make contact with him.
They alleged that the former CEO of FTX had stated that he wanted to reconnect for developing a constructive relationship.
He had also suggested that they use each other as resources and vet details with each other. FTX had filed for bankruptcy in November after the exchange saw a bank run.
This had been triggered by a massive sell-off of the crypto exchange’s native FTT token. The bank run revealed that FTX did not have fully-backed reserves of customer assets.
Therefore, the exchange had not been able to honor its withdrawals and had had to file for bankruptcy protection.
The founder of the crypto empire had been arrested and eight charges were filed against him, but he pled not guilty to the charges and is now waiting for a trial scheduled in October.
Bankman-Fried did not hesitate to admit that he had contacted an employee of FTX, but as far as witness tampering is concerned, he did not admit to those allegations.
His legal team stated that the purpose of the contact was part of the former CEO’s efforts of offering his assistance in the bankruptcy process of the company and did not indicate any misconduct.
However, Judge Kaplan did not consider the recent actions of the crypto mogul as benign and said in a court order that it appeared to be an attempt to have the two individuals telling the same story.
Sam Bankman-Fried had attempted to talk to the witness on January 15th via Signal and prosecutors said that he had also sent an email.
Even though he has not been named, the current counsel of FTX US is Ryne Miller. SBF’s legal team did not dispute the fact that since his release, the FTX founder had contacted other former and current employees.