By Larry Neumeister – The Associated Press
NEW YORK (AP) — FTX founder Sam Bankman-Fried has revealed to newspapers personal content he wrote when he was the chief executive of a cryptocurrency hedge fund trading firm and is harassing key witnesses against him in an upcoming trial, prosecutors said.
Late Thursday, they called on a judge to order trial participants not to tarnish a yet-to-be-selected jury in a criminal case involving Bankman-Fried and other executives who allegedly deceived investors and looted FTX customer deposits as part of their extravagant living expenses.
In a letter to Judge Louis A. Kaplan, prosecutors said Bankman-Fried provided the New York Times with some of Caroline Ellison’s personal correspondence. They said this appeared to have been intended to have her harassing effect on her and to discourage other potential trial witnesses from her testimony.
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They claimed that this was an attempt to “publicly discredit government witnesses” and obstruct the October 2 trial.
Ellison, 28, was the CEO of Alameda Research, a crypto hedge fund trading firm that was a spin-off of FTX.
FTX went bankrupt in November after a bank run on global exchanges ran out of cash.
Ellison pleaded guilty in December to criminal charges that carry a sentence of 110 years in prison. She agreed to testify against Bankman-Fried, 31, as part of a deal that could have extenuated her circumstances.
Bankman-Fried’s attorneys admitted that Bankman-Fried’s client shared documents with the New York Times that are not currently part of the trial evidence before the New York Times published an article Thursday headlined “Personal Documents of Star Witness in FTX Case, Caroline Ellison,” according to prosecutors.
According to the article, Ellison said she doesn’t think she’s very good at running Alameda or being decisive as a leader, and that questions arose as she dealt with sporadic dissolution of her relationship with Bankman-Fried.
The Times reported in April 2022 that Ellison wrote in a Google document that his previous breakup with Bankman-Fried “significantly diminished my excitement about Alameda” and that life at the hedge fund “felt too connected to you and painful.”
Lawyers for Ellison and Bankman-Fried did not respond to emails seeking comment on Friday. A spokeswoman for the prosecution declined to comment.
In a letter to Kaplan, prosecutors fell short of asking a judge to imprison Bankman-Fried in the weeks before his trial.
They said Ellison will testify at trial that he agreed with Bankman-Fried to deceive FTX customers, investors and Alameda lenders.
Prosecutors accused Bankman-Fried of “throwing Ellison in a bad light and attempting to advance his defense through the press while ignoring the constraints of the court and the rules of evidence.” Ellison was the agitated lover who committed these crimes alone.
They said they expected “overwhelming evidence to expose this defense lie” and argued that it would be inappropriate and prejudicial for Bankman-Fried to undermine Ellison’s credibility before trial.
The prosecutor’s office also wrote that attorneys for potential trial witnesses, including those living abroad, said their clients were reluctant to testify in cases that received constant media attention.
“These witness concerns will only be exacerbated if witnesses fear that testimony against the defendant will result in personal humiliation or that cross-examination will involve defamation beyond what the rules of evidence allow,” the prosecutor wrote.
Kaplan suggested earlier this year that Bankman-Fried could be jailed after prosecutors alleged he found a way around electronic communications restrictions that required him to live with his parents in Palo Alto, Calif., as part of a $250 million personal recognition bond issued after his arrest in December.
In February, prosecutors said he may have sent an encrypted message to FTX’s top lawyers in January to try to influence witnesses through a texting app, saying, “We’d love to get back in touch with them to see if there’s a way we can build a constructive relationship, use each other as a resource if possible, or at least scrutinize things with each other.”
At a hearing in February, the judge said prosecutors explained what Bankman-Fried did after his arrest “suggest that he may have committed or attempted to commit a federal felony while on his release.”
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