Former FTX CEO Sam Bankman-Fried faces fraud charges for his role in the collapse of the cryptocurrency exchange. He has agreed to a gag order to stop him from talking to the media, but he also wants to gag other potential witnesses, including the current FTX CEO John Ray.
iexclusivenews reports that Sam Bankman-Fried, the founder of FTX, a cryptocurrency exchange that went bankrupt in 2022, is facing a criminal trial for fraud and other charges.
He is accused of misleading investors, regulators and creditors about the financial situation of FTX and its affiliated entities.
The U.S. government claims that Bankman-Fried tried to interfere with a fair trial by publicly discrediting a former business partner and witness, Caroline Ellison, in an interview with the New York Times on July 19.
In the interview, Bankman-Fried blamed Ellison for the failure of FTX and accused her of stealing millions of dollars from the exchange.
He also revealed confidential information that could prejudice the jury pool.
What is a gag order and why did the U.S. government request one?
A gag order is a legal order issued by a court to restrict information or comment from being made public or passed onto any unauthorized third party.
The purpose of a gag order is to protect the rights of the parties involved in a legal case and ensure a fair and impartial trial.
The U.S. government requested a gag order against Bankman-Fried on July 20, arguing that his comments to the New York Times were an attempt to influence public opinion and taint potential jurors.
The government also said that Bankman-Fried had a history of making false and misleading statements to the media and regulators about FTX and its operations.
How did Bankman-Fried respond to the gag order request?
Bankman-Fried’s lawyers denied the accusations and said that he was exercising his right to free speech and defending his reputation.
However, they agreed to accept a gag order as requested by the government, on one condition: that the same gag order applies to all parties and witnesses that could be involved in his criminal trial.
This would include the U.S. government, former employees of FTX, FTX Debtor entities, Alameda Research (a cryptocurrency trading firm founded by Bankman-Fried) and other potential witnesses.
Why does Bankman-Fried want to gag other witnesses?
Bankman-Fried’s lawyers said that there has been a “toxic media environment” surrounding their client since the collapse of FTX, and that some of the potential witnesses have been making negative and false statements about him in public.
They specifically mentioned John Ray, the current CEO of FTX Debtor entities, who has been appointed by the bankruptcy court to recover assets for FTX creditors.
Ray has been vocal in criticizing Bankman-Fried and accusing him of fraud, mismanagement and self-dealing.
Ray has also filed several lawsuits against Bankman-Fried and Alameda Research, seeking damages and injunctive relief.
Bankman-Fried’s lawyers said that Ray’s attacks on their client have nothing to do with his role as a creditor representative and seem more directed towards publicly vilifying him.
They argued that Ray’s comments could also prejudice the jury pool and interfere with a fair trial.
What happens next?
The U.S. District Court Judge Lewis A. Kaplan of New York will decide whether to grant the gag order request and whether to extend it to other parties and witnesses.
The trial for Bankman-Fried’s fraud charges is scheduled to begin on October 3. He has pleaded not guilty and faces up to 20 years in prison if convicted.
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