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Federal Appeals Panel Rejects Arguments to Free FTX Founder Sam Bankman-Fried

A federal appeals court in Manhattan seemed unreceptive Tuesday to arguments that FTX founder Sam Bankman-Fried should be released on bail before his trial starts in two weeks so he can better prepare for trial.

The 2nd U.S. Circuit Court of Appeals heard arguments in Manhattan, and all three judges were dismissive of his lawyer’s claims that the First Amendment protects him from a judge’s conclusion that his actions while confined to his parents’ home in Palo Alto, California, for eight months violated the conditions of his $250 million bail.

Bankman-Fried, 31, was extradited to the United States last December from the Bahamas to face charges that he stole billions of dollars in FTX customer deposits, spending tens of millions on his businesses, speculative investments, charitable donations and campaign contributions meant to influence cryptocurrency regulation in Washington.

Bankman-Fried, who has pleaded not guilty, was jailed Aug. 11. Judge Lewis A. Kaplan concluded he had tried to influence witnesses against him, most recently by showing a journalist the private writings of a former girlfriend who served as CEO of Alameda Research – Bankman-Fried’s cryptocurrency trading hedge fund – before FTX collapsed last November.

Kaplan said at a recent hearing that the diary-like writings by Caroline Ellison were of the kind that a former romantic partner was unlikely to share with anyone “except to hurt, discredit, and frighten the subject of the material.”

Bankman-Fried’s lawyer, Mark Cohen, told the 2nd Circuit to overturn the revocation of bail so he can properly prepare for a trial set to start with jury selection on Oct. 3. He said documents in the case that his client can no longer access are so voluminous that they would be as tall as three skyscrapers if they were printed out in a single stack.

“You can’t prepare for trial this way, your honor, you just can’t,” Cohen said.

Circuit Judge William J. Nardini was particularly blunt in his assessment of Bankman-Fried’s prospects for release, saying that he should have considered his need to study documents in his case before taking actions that Kaplan concluded were designed to intimidate or influence witnesses.

“But, like anyone else, if it is true that he has intimidated witnesses, at a certain point, he makes his own bed and he sleeps in it,” Nardini said.

Circuit Judge Denny Chin asked if there was a First Amendment right “to influence or discredit a witness who may testify against you. Is there?”

“No, your honor, there isn’t,” Cohen responded.

Circuit Judge John M. Walker Jr. said Kaplan was in the best position to decide whether Bankman-Fried had intent to influence or intimidate witnesses and the 2nd Circuit must “afford tremendous and probably the greatest amount of deference” to his rulings.

The 2nd Circuit did not immediately rule.

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