Disgraced former FTX CEO Sam Bankman-Fried is being sent back to jail over alleged witness tampering.
US District Judge Lewis Kaplan stated that there is probable cause to believe that the defendant attempted to tamper with witnesses on at least two occasions.
Bankman-Fried had been staying at his parents’ house in California on a $250 million bail.
Prosecutors pushing for his bail to be revoked pointed to a number of alleged bail violations, including the use of a VPN to subvert monitoring, contacting potential witnesses who might testify against him and speaking to members of the press about his former colleague Caroline Ellison.
What Next for Bankman-Fried?
Financial press have speculated that, now he has been reprimanded once again, Bankman-Fried could be headed to a federal detention center in Brooklyn, New York.
As per a former warden speaking to the New York Times back in 2019, the detention center in question is “one of the most troubled, if not the most troubled facility in the Bureau of Prisons”.
What’s for sure is that wherever Bankman-Fried is headed next, it’s unlikely to be nice.
He will be tried on eight criminal charges in October.
If found guilty on all counts, he could face life in prison and would go down as crypto biggest ever fraudster.
FTX’s Unfortunate Legacy
FTX is estimated to owe over $3 billion in funds to the users and investors that it defrauded.
Bankman-Fried stands accused having comingled customer funds (and squandered them) with his hedge fund Alameda Research, as well as for misleading investors over FTX’s risk management practices.
FTX collapsed, froze withdrawals and declared bankruptcy last November after the crypto exchange’s users rushed to pull their funds following reporting from CoinDesk that highlighted uncomfortably close financial ties between FTX and Alameda Research.
The exchange’s collapse is probably the crypto industry’s biggest ever scandal – FTX was at the time one of the world’s largest and most famous exchanges, backed by dozens of A-list celebrities, Super Bowl commercials and some of the crypto industry’s most prolific hedge funds.
The exchanges collapse caused a short-term drop in the price of Bitcoin of around 25%, lows which appear to have formed the bottom of the 2022 bear market.
The exchanges collapse has arguably left a lasting dent on retail investor confidence in crypto and web3 markets.
Meanwhile, thanks to Bankman-Fried and FTX’s close ties to politicians on both sides of the isle in Washington, the exchange’s collapse also appears to have left a stain on the crypto industry’s reputation in the eyes of politicians and across various US government agencies.
Some speculate that the SEC’s more aggressive push to regulate the crypto industry in 2023 may be part of a “revenge mission” from the agency, having been scorned by FTX.
After all, FTX was arguably one of the most influential crypto firms in Washington prior to its untimely collapse.
FTX recently submitted plans to reboot its exchange under its new CEO John Ray III.
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