Sam Bankman-Fried (aka SBF) co-founded two sibling enterprises in the still-hazy world of cryptocurrencies. FTX, a trading exchange for digital money/tokens, is one such company. Alameda Research is a hedge fund operator and trading firm. Both finally failed. These failings resulted in the arrest of SBF and others for federal indictments. The Department of Justice has now accused him of witness tampering and requested that the judge adjust his bail conditions to address the issue.
Speaking Out of Turn
Neither the prosecution nor the defense deny that SBF sent an email to FTX’s current General Counsel, who is simply named as “Witness-1.” The issue is the intent behind the intended communication.
The DOJ letter includes what it believes are key passages of the email in which SBF expresses a desire to “reconnect” and suggests they “at least vet things with each other.” Officials said the phrase suggests an attempt to match any future testimony from Witness-1 with his defense plan.
In their reply letter, defense attorneys argue that the government notified them regarding SBF’s communications with Witness-1 and Mr. John Ray, the CEO of the FTX debtor firms. Those who believe they are due money as a result of the Chapter 11 bankruptcy filing claim they were already working on a settlement to the bail terms. They go on to state that, while they do not believe their client’s conduct were wrong, they had previously “agreed to a change of the bail terms” prior to the DOJ’s letter to the judge.
SBF’s counsel told the court that his attempts to reach out were not the “sinister endeavor” to influence potential testimony that the government depicts them to be, but rather efforts to help Mr. Ray.
Nonetheless, the court ordered the government’s proposed amendments limiting SBF’s interaction with anyone connected to his two enterprises, as well as his usage of communications encryption software, until oral arguments on February 7.
SBF was charged with wire and lending fraud, money laundering, and campaign finance offenses. The last charge arose as a result of SBF’s big gifts to numerous politicians. One such example was a $1 million payment to Texas Democrat Beto O’Rourke’s failed gubernatorial campaign, as well as “tens of millions of dollars” to other election initiatives. The government claims the funds were used to lay the framework for him to try to influence any legislation pertaining to the bitcoin business.
The DOJ further claims that SBF misappropriated money from FTX clients for his own investments and to “cover up billions of dollars in expenses and debts accrued by Alameda Research.” NFL quarterback Tom Brady, ABC television’s “Shark Tank” investor “Mr. Wonderful” Kevin O’Leary, and a number of others suffered major financial losses.