US Appeals Court Questions Former Cryptocurrency Billionaire's Claim of Free Speech Violation

| 20 September 2023

| Christie Anto

New York, USA — A federal appeals court panel in Manhattan expressed skepticism on Tuesday regarding former cryptocurrency billionaire Sam Bankman-Fried's assertion that his pre-trial detention, initiated just two months before facing federal fraud charges, infringes upon his right to free speech.

The controversy began when US District Judge Lewis Kaplan revoked Bankman-Fried's $250 million bail on August 11, citing probable cause that the defendant had tampered with witnesses. This alleged tampering included sharing personal writings of Caroline Ellison, the former CEO of his Alameda Research hedge fund and his romantic partner, with a New York Times reporter. Ellison herself has pleaded guilty to fraud charges and is expected to testify against Bankman-Fried during the trial.

Bankman-Fried's attorney, Mark Cohen, argued before a three-judge panel of the 2nd US Circuit Court of Appeals that Judge Kaplan had not sufficiently considered his client's First Amendment rights. Cohen contended that Bankman-Fried should be allowed to speak with the press to restore his reputation, despite the pending legal charges.

However, the appellate judges seemed unconvinced. US Circuit Judge Denny Chin questioned Cohen's assertion, stating, "There isn't a First Amendment right to try to discredit or influence a witness who might testify against you, is there?"

The judges did not provide a timeline for when they would issue a ruling on Bankman-Fried's request for release from the Metropolitan Detention Center in Brooklyn.

Bankman-Fried is currently facing seven charges of fraud and conspiracy in connection with the November 2022 collapse of FTX, the cryptocurrency exchange he co-founded, which has since declared bankruptcy. Prosecutors allege that he siphoned billions of dollars from FTX customer accounts to cover losses at Alameda, purchase luxury real estate, and contribute to US political campaigns. Bankman-Fried has pleaded not guilty to the charges but acknowledged failures in risk management.

The judges did appear somewhat more receptive to Bankman-Fried's argument that his detention violated his Sixth Amendment rights, which grant the accused the ability to aid in their own defense. This claim was based on the complexity of his case and his alleged lack of access to the internet in jail, hindering his review of the evidence presented by prosecutors.

During the hearing, the judges challenged Danielle Sassoon, a prosecutor, regarding the accommodations provided to Bankman-Fried for internet access. Sassoon contended that the government had taken "extraordinary measures" to facilitate Bankman-Fried's trial preparation from behind bars. She pointed out that Bankman-Fried had enjoyed seven months of unrestricted internet access while on bail at his parents' residence in Palo Alto, California.

US Circuit Judge William Nardini suggested that Bankman-Fried should have considered the potential loss of internet access before sharing Ellison's writings. Nardini remarked, "If it is true that he has intimidated witnesses, at a certain point, he makes his own bed, he sleeps in it."

Judge Kaplan had previously stated in a written ruling that Bankman-Fried had not specified which pieces of evidence he had been unable to access and noted that the defendant had not requested a trial delay, despite the judge's willingness to consider one.

As the legal battle unfolds, the fate of Sam Bankman-Fried hangs in the balance, with his constitutional rights and the seriousness of the charges he faces at the center of the ongoing courtroom drama.