SBF could be banned if it continues to use encryption: Judge

A Manhattan federal judge on Thursday proposed that disgraced FTX founder Sam Bankman-Fried be locked up pending trial if the accused fraudster continues to misuse electronic devices while on bail.

Judge Lewis Kaplan asked federal prosecutors and Bankman-Freed’s attorneys why he should allow the alleged crypto scammer to return to his parents’ home in California, where he would be surrounded by rogue electronic devices.

“There is a solution, but no one has suggested it yet,” Kaplan said at the hearing, referring to the possibility of Bankman-Friend being arrested after it was revealed he used an encrypted app to send messages to an FTX employee.

The judge noted that, in his opinion, there was a probable cause that Bankman-Fried committed a federal offense while on remand, “namely, tampering with witnesses or attempting to tamper with witnesses.”

“Why am I being asked to release it into this garden of electronic devices?” Kaplan added.

Prosecutors did not seek Bankman-Freed’s arrest at the hearing, but offered stricter bail conditions that would effectively bar him from using all computers except while preparing for trial.

Bankman Fried prosecutors and defenders will present proposed terms next week. Until then, Kaplan will extend the order restricting the accused fraudster’s access to electronics.

Thursday’s hearing came after federal prosecutors found Bankman-Fried contacted a potential trial witness on an encrypted Signal app and used a virtual private network — or VPN — to access the internet.

Bankman-Freed’s use of encryption methods first came to light in late January, when prosecutors told Kaplan that the accused shaggy-haired scammer had used Signal on January 15 to report to the general counsel of his former cryptocurrency exchange platform.

In response, Kaplan banned Bankman-Fried from communicating with current or former employees of the company and ordered him not to use “any encrypted or ephemeral calling or messaging applications.”

Following this February 1 order, prosecutors found that Bankman-Fried used a VPN to access the internet at least twice, including on February 12.

Bankman-Freed claimed he used the VPN to access an NFL Game Pass subscription he bought while living overseas in the Bahamas to watch playoff football, including the Super Bowl.

Prosecutors in a letter filed Wednesday urged Kaplan to impose stricter bail conditions on Bankman-Freed, arguing that he does not need to use a VPN to watch the NFL.

“Viewing the Super Bowl did not require an international NFL Game Pass subscription; it was, for example, on cable TV, free to air using an antenna, free to watch on the Fox Sports app, and also aired in the US on some minor websites,” they wrote.