Prosecutors ask court to stop Sam Bankman-Fried from using Signal

He is trying to influence the witness, alleged prosecutors.
Ameya Paleja
Sam Bankman-Fried
Sam Bankman-Fried

David Dee Delgado/Getty 

Prosecutors of the FTX trial in the U.S. have asked the court to tighten the norms of the bail given to former CEO Sam Bankman-Fried (SBF) and bar him from using the encrypted messaging app Signal, The New York Times reported. As per currently imposed conditions, SBF has been confined to stay at his parent's home in Palo Alto, California.

30-year-old Bankman-Fried, who shot to fame with his cryptocurrency exchange, FTX, has been charged with fraud, money laundering, and campaign finance violations after he filed for Chapter 11 bankruptcy for his company. Once valued at over $32 billion, the company crashed after cryptocurrencies lost their sheen last year.

Although Bankman-Fried has pleaded not guilty to the charges levied against him, prosecutors state that he was well aware of the transactions that were taking place at the crypto exchange, which led to a sharp liquidity crunch and later its downfall. Billions of investor money have been lost and prosecutors claim that Bankman-Fried directed top brass at the company to hide liabilities worth $8 billion.

Signal and automatically deleted conversations

Bankman-Fried founded FTX and remained its CEO for much of the company's heydays. During this time, he encouraged his staff to use messaging apps such as Signal and Slack. On both these platforms, Bankman-Fried ensured that the messages were automatically deleted within 30 days or less.

Prosecutors investigating the affairs of the FTX and Alameda Research, a trading company set up by Bankman-Fried, which swapped investor money at FTX instead of a self-issued token, have found the automatic deletion feature an impediment in their work. Several conversations that Bankman-Fried had with the individuals who are now witnesses in the case have been auto-deleted, making the job of the prosecutors even more difficult.

SBF tried to contact FTX's general counsel

In the federal court, the prosecutors have now alleged that Bankman-Fried contacted the general counsel of the U.S. arm of FTX over email and Signal in an attempt to "reconnect", "have a constructive relationship" and "use each other's resources when possible", the NYT said in its report.

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The FTX general counsel is Witness-1 in the trial and Bankman-Fried is well aware that the former has information that could place the blame for the company's collapse on the former CEO, the prosecutors said.

The prosecutors told the court that Bankman-Fried's messaging app usage would obstruct their efforts to determine if he also tried to contact other former and current employees at FTX. The prosecutors said that tightening the conditions of the bail would "prevent the defendant from obstructing justice."

Bankman-Fried's lawyers claimed that federal prosecutors were painting the defendant in the "worst possible light" and he only contacted the general counsel and the current CEO at FTX US to offer "assistance" Engadget reported. They also added that a ban on messaging app was no longer required as the former CEO had stopped using the auto-delete feature.

Bankman-Fried can currently entertain visitors while under confinement and has met author Michael Lewis who is writing a book about the crypto exchange founder. In his defense, Bankman-Fried has also started writing posts on Substack detailing his version of the event leading up to FTX's collapse.

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