FTX Collapse: Why Is Sam Bankman-Fried Going to Jail Now?

By Rick Martin First Posted: Aug 11, 2023 10:41 PM EDT

FTX founder Sam Banman-Fried is going to prison. This is because of witness tampering in relation to the FTX collapse and the fall of his crypto empire.

According to CNBC, the judge sided with federal prosecutors and revoked his bail over alleged witness tampering. This means he will remain in custody in New York before his trial begins on October 2.

"My conclusion is there is probable cause to believe the defendant tried to tamper with witnesses at least twice," said Judge Lewis Kaplan, the same judge overseeing Donald Trump's rape case in New York. Bankman-Fried is appealing the decision.

Prosecutors requested that the FTX founder be remanded to a jail in Putnam, New York after he was able to access a laptop with internet for defense preparation. He was supposed to be sent to the Metropolitan Detention Center in Brooklyn, which has limited internet access for prisoners. The prison is near the courthouse where the case is being heard.

After he was arrested last December and extradited back to the US, SBF has been out on a $250 million bail package. It requires him to remain at his parents' home in Palo Alto, California. However, he may have broken the bail conditions when he intimidated his ex-girlfriend, a potential witness against him.

Sam Bankman-Fried Ex-Girlfriend Is Cooperating With Authorities Regarding FTX Collapse

Prosecutors asked that SBF be detained after he sent over 100 emails to the media and made over 1,000 phone calls to members of the press. However, the biggest violation that the disgraced crypto bro did was leak the diary of his ex-girlfriend, Caroline Ellison, who is cooperating with authorities in the case.

The New York Post noted that Judge Kaplan ruled that there is probable cause to believe that SBF tried to "tamper with witnesses at least twice" since he was arrested last December. Kaplan then rejected his lawyers' appeal for an immediate stay.

Ellison served as the chief executive of Bankman-Fried's failed crypto hedge fund, Alameda Research. She is expected to become the prosecution's star witness in the case. The former hedge fund executive pleaded guilty to federal charges late last year.

Judge Kaplan stated in his ruling that SBF's release of her love letters and diary to the media was designed to "hurt" and "discredit" a witness.

FTX Collapse Explained

Unlike his ex-girlfriend, Sam Bankman-Fried previously pleaded not guilty to allegedly misusing billions in FTX customer funds to fund his lavish lifestyle and make risky business decisions.

FTX is short for "Futures Exchange," and it became one of the biggest crypto trading platforms in the world. It was even praised by regulators and market watchers as one of the most transparent crypto operations. However, SBF's lifestyle soon led to its downfall.

According to USA Today, many believe that the implosion began when FTX's sister company Alameda Research, had a balance sheet filled with FTX's own cryptocurrency, FTT. More details of shady dealings about FTX soon followed, with Changpeng Zhao, the founder of Binance, announcing that his company would offload all of its remaining FTX tokens "due to recent revelations that have came to light."

When Binance started withdrawing, it created a domino effect where investors started withdrawing. More and more shady dealings then came to light as it emerged that FTX transferred $10 billion to Alameda Research. Soon, the company went bankrupt, and FTX founder SBF was arrested.

This article is owned by Latin Post.

Written by: Rick Martin

WATCH: Judge revokes bail for FTX's Bankman-Fried sending him to jail - NBC News