Why Sam Bankman-Fried Got His Phone Taken Away
Reading Time: 6 minutesUnder house arrest, the disgraced FTX CEO could just not stop posting., Why Sam Bankman-Fried got his phone taken away.
If you’re Sam Bankman-Fried, the disgraced cryptocurrency entrepreneur facing criminal charges over his now-bankrupt businesses, you might have felt some relief on Tuesday morning for the first time in months: You can still have some screen time! The former FTX CEO agreed to new bail terms with the judge in his case that grant him limited cellphone and laptop access; meanwhile, the United States government began cracking down on Binance, a rival crypto exchange whose CEO helped kick off the series of events that sank FTX late last year.
Still, any relief was short-lived. Because if you’re Sam Bankman-Fried, you’ve also just been accused of even more new misdeeds—bribing Chinese officials, teaming up with friends to defraud everybody you possibly could, and maybe attempting to tamper with witnesses for the prosecution you’re currently facing—on top of all the other charges from December (conspiracy to commit fraud, campaign-finance violations).
Remember why SBF needed a new deal over his digital browsing in the first place? In late January—about a month after Bankman-Fried was extradited from the Bahamas and granted bail in New York so that he could await his October trial under house arrest at his parents’ home in Palo Alto—federal prosecutors from the Southern District of New York accused SBF of inappropriately contacting current and former employees from his enterprises, the crypto exchange FTX and the hedge fund Alameda Research. So they asked the district judge to curtail his internet access and maybe send him back to jail if he violated those terms: no sneaky deletion of old text messages and no crypto trading, among other parameters. That’s the situation SBF has been untangling ever since, going back and forth with the American judicial branch over how and whether he can catch himself some good old-fashioned American football. It seems that with the new bail arrangement, SBF’s righteous struggle to get mad online while awaiting his October trial will have some slightly sturdier guardrails. (More on that below!)
To commemorate the outcome of this true poster’s fight for the right to post, let’s look back at all of SBF’s funny, weird, or potentially illegal online journeys since his return from the Bahamas.
According to SDNY, Sam Bankman-Fried’s Dec. 22 bail terms did not ‘impose limitations on the defendant’s ability to contact any prospective witnesses in the case.’ Yet, when it turned out a newly free SBF was contacting witnesses and sending them potentially sketchy messages, the court felt like it needed to rethink things. On Jan. 15, SDNY revealed, Bankman-Fried initiated contact with ‘Witness-1’ over Signal, ‘without the presence of either defendant’s or Witness-1’s counsel.’ While this witness’s name was redacted, they were identified as the general counsel of FTX.us—which means Witness-1 is Ryne Miller, the former government financial regulator who joined FTX U.S. in August 2021, helped oversee the company’s bankruptcy, and has stayed on throughout the aftermath. Because SBF’s January message to Miller proposed ‘a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,’ prosecutors argued that SBF was attempting to influence Miller, who would likely take the witness stand in the upcoming trial. SBF’s legal team pushed back on this charge, writing to the judge that the message was ‘merely an innocuous attempt to offer assistance in FTX’s bankruptcy process.’ (The lawyers did not explain why their client was entitled to ‘offer assistance’ in winding down one of the very companies he was in trouble for having mishandled, but anyway.)
But this wasn’t the only unrequited, potentially untoward message SBF dispatched while in legal peril. As the Financial Times documented, on Dec. 12—the same day he was arrested in the Bahamas—Bankman-Fried emailed FTX bankruptcy CEO John J. Ray III offering ‘potentially pertinent information concerning future opportunities and financing for FTX and its creditors’ and asked ‘to work constructively with [Ray] and the Chapter 11 team to do what’s best for customers.’ No response. Then, after his extradition, the crypto mogul sent another email to Ray on Dec. 30 in which he offered advice on accessing Alameda funds; still no response. Then, while being summoned to court in New York, SBF tried Ray again on Jan. 2: ‘Mr Ray, I know things haven’t gotten off on the right foot, but I really do want to be helpful … As I’m guessing you’ve heard, I’m in NYC for the next day. I’d love to meet up while I’m here—even if just to say hi.’ (Ray did not take up that offer to say hi.)
One could understand, from these messages, why the courts would desire more scrutiny of SBF’s communications under legal duress.
Like many other wealthy people with Things to Say, SBF launched a newsletter: SBF’s Substack. Like so many other aspiring writers who start new blogs, he hasn’t written very much on it. (Though it appears he may be penning his own If I Did It while under lockdown?)
In fairness, the reason why SBF stopped writing might be that it’s unclear what these missives were even accomplishing. On Jan. 12, Bankman-Fried sent out his first newsletter, titled ‘FTX Pre-Mortem Overview,’ in which he offered his overview of ‘FTX International’s (in)solvency.’ Yet this newsletter provided as much clarity as SBF’s dozens of post-fall-from-grace media interviews—that is, none. As Timothy B. Lee wrote at the time, ‘he has nothing to say about the main accusations against him,’ including how deeply involved SBF was in allowing Alameda to access an inappropriate amount of FTX customers’ funds. Rather, the Substack was just ‘2,000 words on issues nobody really asked about.’
SBF posted on, sharing a second newsletter on Jan. 17 that accused the law firm overseeing FTX’s properties of releasing ‘extremely misleading’ information as to FTX U.S. This one kinda hit a sophomore slump: It didn’t gain as many likes as the first issue, and it featured weirdly formatted Excel tables that even SBF had to admit were ‘ugly af‘ in a tweet. Anyway, it’s unclear if these posts bothered the feds, although they surely were of great consternation to FTX’s counsel.
Speaking of tweets, you better believe my dude was all over the bird app post-Bahamas: asking about going on podcasts, using the vintage 😛 emoticon a couple times, sharing his newsletter, addressing typos therein, making overtures to the unresponsive John Ray III, insisting over and over that FTX’s U.S. operations are solvent, and retweeting posts that cast suspicion on the law firm overseeing FTX’s U.S. operations: Sullivan & Cromwell, which he’d also called out in his newsletter. SBF has not tweeted or retweeted anything since Jan. 20—the day after the Securities and Exchange Commission charged him with even more crimes, including securities fraud and defrauding investors.
After all the messages and tweets and public postings, SDNY really didn’t want SBF to keep weighing in on matters related to, or speaking with people involved with, the ongoing FTX and Alameda legal quandaries. So in early February, Judge Lewis Kaplan forbid SBF from using encrypted texting tools like Signal, though he was still allowed to access apps like FaceTime, iMessage, email, and Facebook Messenger, as long as all communications were archived. All good. Yet shortly after that restriction was imposed, SBF was summoned back to New York. Why? Because he had used a virtual private network (which allows you to use a foreign country’s IP address to evade U.S. government detection) twice already in 2023. Not to worry, said Bankman-Fried’s legal team: He was just using that VPN to gain access to his international NFL Game Pass account, to which the sports enthusiast had subscribed so he could keep up with his favorite football stars. SBF really wanted to catch the Super Bowl, to hear it from his lawyers. Hopefully he wasn’t rooting for the Eagles, because after that sneaky viewing, he’s had to promise to stop using VPNs for the time being. No more sports for SBF, it would seem, even though events like the Super Bowl are obviously accessible without a VPN workaround. (It should be noted that SBF’s parents don’t appear to have a TV.)
On March 3, the U.S. attorney for the Southern District of New York presented a new bail proposal for SBF, with the approval of the defendant’s lawyers: no contacting FTX or Alameda associates, no unauthorized VPNs, no encrypted messages, no ‘smart devices with internet capability,’ no video games (which means no League of Legends), use of only basic functions on a flip phone and a laptop, limited access to digital apps like Zoom and Python, and a whitelist of certain websites SBF could visit either for trial preparation or personal use, whether those be government resources or the New York Times’ digital edition. But Judge Kaplan didn’t like the new rules, claiming they freed up too much wiggle room for SBF to ‘find a way around it and conceivably not get caught.’
Hence, the new bail conditions that landed this week, which add some extra restrictions. Under the new proposal (on which Kaplan still needs to sign off), SBF can only use Zoom when speaking with lawyers, can access only one government-monitored email address, cannot store any data on flash drives, cannot buy any new devices, and cannot host visitors with advanced internet-connected equipment. At any rate, it seems SBF is legally blocked from reading this article. Sad!
Reference: https://slate.com/technology/2023/03/why-sam-bankman-fried-got-his-phone-taken-away.html
Ref: slate
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