U.S. judge rejects new bail conditions for FTX founder Bankman-Fried

FILE PHOTO: Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, arrives on the day of a hearing at Manhattan federal court in New York City, U.S. January 3, 2023. REUTERS/David Dee Delgado/File Photo

NEW YORK (Reuters) -A federal judge on Tuesday rejected a proposal to modify Sam Bankman-Fried's bail conditions, despite an agreement between the FTX cryptocurrency exchange founder and prosecutors to address potential witness tampering concerns.

U.S. District Judge Lewis Kaplan in Manhattan did not provide reasons for the denial, and said a hearing on bail remains scheduled for Feb. 9.

A spokesman for Bankman-Fried declined to comment. The office of U.S. Attorney Damian Williams in Manhattan did not immediately respond to a request for comment.

Bankman-Fried, 30, has been free on $250 million bond and living with his parents in Palo Alto, California, since pleading not guilty to looting billions of dollars from the now-bankrupt FTX.

Prosecutors had asked last month to tighten bail, citing Bankman-Fried's efforts to contact both the general counsel of the FTX U.S. affiliate and new FTX Chief Executive John Ray, ostensibly to provide assistance.

Their proposed conditions would prevent Bankman-Fried from talking with most employees of FTX or his Alameda Research hedge fund without lawyers present, or using encrypted messaging apps such as Signal.

On Monday, Bankman-Fried's lawyer Mark Cohen said his client and prosecutors would allow communications with a specific set of employees, pending Kaplan's approval.

That agreement would also ban Bankman-Fried from using Signal, but let him communicate by phone, email, text message, Zoom and FaceTime, as well as WhatsApp if he installed monitoring technology.

Bankman-Fried would have also withdrawn his objection to a bail condition preventing him from accessing FTX, Alameda or cryptocurrency assets.

His lawyers had previously proposed a ban on contact only with certain potential witnesses such as former Alameda chief Caroline Ellison and former FTX technology chief Zixiao "Gary" Wang, who have pleaded guilty to fraud and are cooperating with prosecutors.

Separately, prosecutors on Tuesday asked another judge to put on hold Securities and Exchange Commission and Commodity Futures Trading Commission civil lawsuits against Bankman-Fried until the criminal case ended.

They cited the cases' substantial overlap, and the risk Bankman-Fried could gather evidence in the civil cases to help his criminal defense.

(Reporting by Luc Cohen and Jonathan Stempel in New York; Editing by Daniel Wallis)

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