MANHATTAN (CN) — A federal appeals panel on Tuesday displayed skepticism toward releasing disgraced cryptocurrency mogul Sam Bankman-Fried from the Brooklyn jail where he’s detained ahead of an October trial.
Bankman-Fried’s lawyers asked a three-judge panel of the Second Circuit Court of Appeals to reconsider a district judge’s revocation of the $250 million bail package that had previously allowed the founder of the now-bankrupt FTX cryptocurrency exchange to await trial at his parents’ home in Palo Alto, California.
Jury selection is set to begin Tuesday, Oct. 3, in Bankman-Fried’s criminal trial in Manhattan federal court. He faces counts of securities and wire fraud, money laundering and conspiracy for allegedly looting FTX customer deposits.
Defense attorneys on Tuesday asked the appeals court to find that U.S. District Judge Lewis Kaplan erred when he revoked the cushy house arrest package in August and sent the 31-year-old former billionaire to a federal jail facility over findings of witness intimidation, including his leaking of a star witness’s private diaries to The New York Times.
The three-judge panel appeared unlikely to be persuaded to reverse the lower court’s decision to remand on the grounds that Kaplan had not sufficiently considered Bankman-Fried’s First Amendment rights to speak with the press and try to restore his reputation.
“If it is true that he has intimidated witnesses, at a certain point he makes his own bed, he sleeps in it too,” U.S Circuit Judge William Nardini said during brief in-person oral arguments on Tuesday morning.
Nardini, a Trump appointee, also rejected a defense theory that a person’s belief that their speech is protected by the First Amendment is enough for those protections to apply.
“Somehow their subjective belief exculpates them? I’ve never heard that,” he remarked.
U.S. Circuit Judge Denny Chin signaled agreement with the idea such constitutional protections are withdrawn when the underlying conduct is criminal intent to interfere with witnesses.
"There isn't a First Amendment right to try to discredit or influence a witness who might testify against you, is there?" the Obama appointee said.
Nardini and Chin were joined on the panel by Senior U.S. Circuit Judge John Walker, a George H. W. Bush appointee, who also expressed skepticism toward reversing the district court’s decision to remand.
“If there is an obstruction or an intent to intimidate," he said, "the First Amendment has no play.”
Attorney Mark Cohen told the panel Bankman-Fried can't adequately prepare for his trial next month while remanded to the notorious Metropolitan Detention Center, in the Sunset Park neighborhood of Brooklyn.
Judge Nardini said he hoped prosecutors would be “bending over backwards” to ensure the defendant has ample opportunity to prepare for trial, at the risk of providing grounds for overturning a verdict on appeal.
“After all, if there’s a conviction, they don’t want an issue on appeal,” he said.
Assistant U.S. Attorney Danielle Sassoon argued that the fact Bankman-Fried leaked Caroline Ellison’s diaries to The New York Times “anonymously and covertly” indicated a consciousness of guilt, and awareness that such conduct was not protected.
Sassoon said “a constellation of facts” supported the decision to revoke Bankman-Fried’s bail beyond just the leaks to a Times reporter, including prior attempts to communicate and coordinate with witnesses that prompted a protective order in the district court.
The panel did not immediately rule on the appeal.
At a hearing before a federal magistrate judge earlier this month, Bankman-Fried’s lawyers raised concerns that he was denied his ADHD medication and not being served sufficient vegan meals during his incarceration at the MDC.
Bankman-Fried’s former company FTX sued his parents, Joseph Bankman and Barbara Fried, in Delaware federal bankruptcy court late Monday night, alleging that the couple siphoned millions of dollars out of the FTX Group for their personal benefit and chosen pet causes.
The cryptocurrency company, now operating under CEO John Jay Ray III, a veteran Wall Street bankruptcy lawyer, accuses both of the Stanford Law School professor parents of receiving funds from their son’s company in the form of gifts and donations to select causes, including Stanford.
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