Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. In this post I will be discussing the latest developments with Sam Bankman-Fried, the founder of FTX, and how the Department of Justice (DOJ) has put in a request to jail him before his trial date.
DOJ Request
The U.S. DOJ has made a request to a U.S. Judge for FTX founder Sam Bankman-Fried (SBF) to have his bail bond revoked and be sent to jail before his scheduled trial in October. The request was made as part of a written submission to a federal judge on Friday the 28th of July 2023, where the DOJ alleged that Bankman-Fried has made repeated attempts to influence witnesses in the case. This would be contrary to his current bail conditions, which the DOJ claim are insufficient to protect the public.
The move follows on from SBF deciding to share diaries belonging to former Alameda Research CEO Caroline Ellison with the New York Times. The attorney for SBF, Mark Cohen, argued that SBF shared these private writings and thoughts to exercise his right to defend himself in public, but the DOJ claim he went far beyond fair commentary with his actions. The filing noted:
"The defendant’s leaking of Ellison’s private writings is yet another instance of the defendant trying to intimidate and corruptly persuade Ellison with respect to her upcoming trial testimony, as well as an effort to influence or prevent the testimony of other potential trial witnesses by creating the spector that their most intimate business is at risk of being reported in the press,"
The filing goes on to state that SBF has repeatedly sought to corruptly influence witnesses, which in turn would interfere with the fairness of the trial via public harassment and shaming. The DOJ has requested immediate detention of SBF, however Judge Lewis Kaplan from the Southern District of New York did not comply with this request. Instead he has set out an expedited schedule for the prosecution and the defense to submit formal written statements. The DOJ submitted their statement by Friday the 28th of July 2023, while the defence has until Tuesday the 1st of August to submit their response. The DOJ's final response will be due on the 3rd of August 2023.
Judge Kaplan did however express his concern over the contact between SBF and journalists. He warned SBF that the matter is a serious one and issued an interim gag order, which will prevent SBF from communicating with the press of making public statements until Judge Kaplan reviews the written submissions.
This is also not the first time Judge Kaplan expressed concern over the actions of SBF while on his bond. Back in February 2023 the judge stated that there was probable cause to believe that SBF's interactions with former FTX general council Ryne Miller was witness tampering. This was noted once again during the recent hearing, and could also play into the DOJ's hands in terms of getting SBF's bail bond revoked.
SBF is due in court to face trial in October for securities and wire fraud charges. He will also be involved in a second trial in March 2024 regarding bank fraud and bribery allegations.
Ellison Diaries
The diaries of Caroline Ellison, which were written by the former CEO of Alameda Research on a Google Docs sheet, were released by SBF to the New York Times and published on the 20th of July 2023. These documents give a clear insight into the mind of Caroline Ellison at in the weeks and months leading up to the collapse of FTX. One such extract from February 2022 stated:
“I have been feeling pretty unhappy and overwhelmed with my job. At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”
The article shows how she was clearly under stress within her position, while also feeling incapable of doing her job correctly. She and SBF had recently broken up from their on again off again relationship, and by April 2022 she was less interested and excited about working at Alameda Research as it was revolved around SBF. However, one of the most interesting parts of the documents and article is how it highlights Ellison in a potentially jealous light.
SBF had been losing faith in Alameda Research and had pumped more than $400 million into Modulo Capital. This firm was also led by a former romantic partner of SBF. According to the article, Caroline Ellison expressed jealousy and resentment toward Modulo in some of her writings. She also apparently felt like she was being squeezed out, and this may well be used as a way to paint SBF in a more favourable light come his trial.
Caroline Ellison will be one of the key witnesses against SBF, and as far back as April 2022 she had written things like “Running Alameda doesn’t feel like something I’m that comparatively advantaged at or well suited to do.” and her lack of leadership skills. Painting her in this light is likely a strategy to show she was the incompetent one behind the wheel and not SBF, however in the end it was his decision to retain her behind said wheel.
An even more interesting development is the request by SBF to have the diaries sealed and ensure the public cannot read them. SBF's lawyer noted:
"The presumption of access to these documents is greatly outweighed by the need to avoid their public dissemination at this time,"
However, this could easily be a move to ensure the documents are sealed after the speculation caused by their leaking to the New York Times, and ensuring that the entirety of the information involved is not released and a full picture is not painted.
Its all very interesting strategy and gamesmanship at play here. In a couple of months one of the largest trials to take place in the crypto industry will begin, and the shots are already being fired. There is certain to be plenty more along the way.
Have a great day.
Peace. CryptoGod-1.
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