Embattled Bankman-Fried might be heading to prison before trial. Know why

FTX co-founder Sam Bankman-Fried might be heading to jailsooner than anticipated. A US judge on Wednesday said he will consider jailingBankman-Fried before the trial after prosecutors argued that the embattled crypto trader had indulged in witness tampering.

During a hearing, prosecutors asked US District JudgeLewis Kaplan to detain the FTX chief, saying he had 'crossed a line' by sharing his former partnerCaroline Ellison's personal writings with a reporter, which amounted to a second instance of witness tampering.

Notably, Ellison is also the former CEO ofFTX offshoot Alameda Research and hasagreed to testify against Bankman-Fried as part of a deal for leniency after admitting to charges that carry a punishment of up to 110 years in prison.

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"This latest incident is an escalation of an ongoing campaign with the press that has now crossed a line," saidprosecutor Danielle Sassoon from the Manhattan US Attorney's office,referring to the Ellison writings. "This isn't a First Amendment issue."

Consequently, Judge Kaplan imposed a "gag order"restricting Bankman-Fried's ability to speak publicly and said he would consider prosecutors' request to jail the former billionaire till the trial begins in October, later this year.

"I'm very mindful of the government's interest in this issue, which I take seriously.Mr. Bankman-Fried, you'd better take it seriously too," said the judge.

WATCH |FTX founder Sam Bankman-Fried is 'ready to face music?'

Bankman-Fried pleads not guilty

In January, Bankman-Friedpleaded not guilty to fraud charges in front of the Manhattan federal court, setting the stage for the October trial.The eight charges levelled against Bankman-Fried were related to the collapse of FTX and hedge fund Alameda Research.

The charges vary from wire fraud to money laundering to campaign finance violations, with five of them carrying a maximum sentence of 20 years in prison.

Since being extradited from the Bahamas, where FTX was based, on a $250 million bail package, Bankman-Fried has been living understrict supervision at his parents’ home in Palo Alto, California.

Despite all evidence pointing to Bankman-Fried's heavy involvement in the fraud, the former crypto wunderkind continues to maintain that he did not 'steal' the funds.

"I didn’t steal funds, and I certainly didn’t stash billions away. Nearly all of my assets were and still are utilisable to backstop FTX customers," wrote Bankman-Fried in one of his blog posts.

Read more: FTX co-founder Sam Bankman-Fried pleads not guilty to fraud, setting stage for a court trial

What happened to FTX?

FTX filed for bankruptcy in November last year after traders rushed to remove $6 billion off the platform in only 72 hours. The fate of the company was sealed after rival exchange Binance's rescue deal fell through.

According to US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), Bankman-Fried masterminded the misappropriation of more than $8 billion in funds from customer accounts.

(With inputs from agencies)

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