scorecardA judge won't let Sam Bankman-Fried use any messaging apps that auto-delete texts
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A judge won't let Sam Bankman-Fried use any messaging apps that auto-delete texts

Jacob Shamsian,Sindhu Sundar   

A judge won't let Sam Bankman-Fried use any messaging apps that auto-delete texts
Investment3 min read
  • A federal judge in New York banned Sam Bankman-Fried from using messaging apps that auto-delete texts.
  • Prosecutors said Bankman-Fried used the encryption app Signal to send messages while detained at his parents' home.

A federal judge in New York ruled on Thursday that Sam Bankman-Fried shouldn't use messaging apps that can auto-delete text messages.

US District Judge Lewis Kaplan extended his ruling blocking Bankman-Fried from using the apps while he considers how the former FTX CEO should be allowed to communicate with others ahead of his criminal trial.

"I'm far less interested in the defendant's convenience than the risk of deleting messages," Kaplan said at a hearing Thursday.

Kaplan held the hearing after making an unusual decision to reject an agreement between prosecutors and Bankman-Fried's legal team about his bail conditions.

The terms the parties had proposed would have barred Bankman-Fried from using apps like Signal, which encrypt messages and allow users to delete them automatically after a set period of time. Under that proposed agreement, Bankman-Fried would have still been allowed to use video chatting apps and WhatsApp, so long as there was monitoring technology installed on his phone that preserves all his messages.

Kaplan found the agreement inadequate, he said in court Thursday.

"It does nothing but spark more questions," he said.

In his courtroom in lower Manhattan, Kaplan said he was concerned Bankman-Fried would have access to functionality in iMessage that allows users to delete text messages and make it difficult for prosecutors to get ahold of them later. While both sides agreed to use monitoring technology for WhatsApp, it didn't go far enough, Kaplan said.

Kaplan was also concerned about Bankman-Fried encrypting messages in a way that would keep them out of the hands of prosecutors.

"I've read all the spy novels," Kaplan said.

The judge indicated he wanted to issue a rule that would forbid Bankman-Fried from using any form of encryption in his communications, including from a secret code of his own devising.

"You don't think this defendant is bright enough to encrypt something in writing?" Kaplan asked Assistant US Attorney Danielle Sassoon.

Sassoon said she was confident prosecutors would be able to access all of the FTX founder's messages.

"To the extent the defendant communicates in handwritten code, that's not something we anticipate or are particularly concerned about," she said.

Federal prosecutors in Manhattan charged Bankman-Fried in December with eight criminal counts, including wire fraud and conspiracy to commit money laundering. He's been released on a $250 million bail arrangement, which requires him to be detained at his parents' home in Palo Alto.

Last month, prosecutors sought to restrict Bankman-Fried's bail terms around whom he could freely communicate with, saying he contacted "current and former FTX employees," and were concerned that such messages could lead to "witness tampering."

Kaplan initially agreed to limit Bankman-Fried's use of messaging apps, and said he found it alarming that he contacted a witness in the criminal case, identified in a court filing as a general counsel for FTX. Bankman-Fried appeared to be trying to bring the witness over to his side, Kaplan wrote.

On Thursday, Kaplan extended his order limiting Bankman-Fried's messaging until February 21, at which point he expects the parties to give him a more detailed proposal for how to make sure the FTX founder's messages could be accessed by prosecutors.

A representative for Bankman-Fried declined to comment.

Separately, Bankman-Fried's attorneys have sought to keep the identities of the two bail sponsors besides his parents under wraps, arguing that revealing their names publicly would expose them to the kind of harassment he said his parents have faced.

Judge Kaplan rejected that rationale in a ruling last month, siding with media organizations including Insider that had argued there is a public interest in knowing who Bankman-Fried's bail sponsors are.

Bankman-Fried's attorneys are appealing that decision, arguing that the sponsors' privacy rights trump the public's right to understand the details of the bail arrangement.




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