The New York Federal Prosecutor has urged Judge Lewis Kaplan to imprison former FTX chief, Sam Bankman-Fried (SBF), for crossing a critical boundary. SBF allegedly provided journalists with personal writings belonging to Caroline Ellison, a move perceived as witness intimidation.
The investigations into the collapse of FTX and Alameda Research have exposed the extent of SBF's misconduct in misusing investors' and customers' funds. Operating in the ambiguous realms of blockchain and cryptocurrency, SBF stands accused of misappropriating billions of dollars through questionable practices, including political sponsorships, corrupt deals, and lavish marketing tactics. The U.S. government has gathered crucial witnesses to support wire fraud charges against SBF. Several former top FTX executives, including Caroline Ellison, have already pleaded guilty and agreed to testify against SBF in the upcoming October 02 hearing.
Currently under house arrest at his parents' residence, SBF was granted a $250 million bond by the court. However, he has faced allegations of witness intimidation on multiple occasions. One instance involved text messages sent to the current FTX CEO, John Ray, in which SBF allegedly claimed that the funds of the company's U.S. customers were secure despite filing for Chapter 11 bankruptcy protection. The current FTX administration refuted these claims, stating that only around $5 billion of the nearly $30 billion in liquid assets have been recovered.
SBF's legal team recently acknowledged that he had communicated with journalists concerning Ellison. It appears that SBF shared Ellison's personal writings with the journalists, an action that has been seen as an attempt to intimidate witnesses.
In light of these revelations of witness intimidation, Federal Prosecutors have requested Judge Kaplan to order SBF's immediate detention ahead of the scheduled October 02 trial hearing. Federal Prosecutor Danielle Sassoon informed the court during a Wednesday hearing that SBF's communication with the journalists constituted a breach of the bond agreement and represented an escalation in his ongoing campaign with the press. The prosecutors believe that SBF's public interactions pose a threat to the proper investigation of the FTX collapse.
In response to the FTX scandal and to safeguard investors from predatory crypto projects, U.S. lawmakers have fast-tracked the process of drafting and discussing crypto-related legislation. Coinbase Global Inc. CEO Brian Armstrong has called on American citizens to urge their representatives to vote in favor of the Financial Innovation and Technology for the 21 Century Act, which is set to take place on Thursday. Armstrong believes that this bill will enhance investor protection, foster innovation, and strengthen national security.
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