FTX founder and former CEO Sam Bankman-Fried (SBF) is facing multiple charges of fraud, wire fraud, money laundering and more from US prosecutors.
The almost year-old criminal case has been underway since his arrest in the Bahamas after the collapse of FTX.
On a July 20 presentationThe US Department of Justice (DOJ) charged the former CEO of FTX with leaking Caroline Ellison’s private diary to the New York Times.
Caroline Ellison was the former CEO of FTX’s sister company, Alameda Research, who became a government witness in the Bankman-Fried case.
US DOJ Seeks Injunction Barring SBF and Other Parties From Making Extrajudicial Statements
The Justice Department based its accusation on a recently released report New York Times article which revealed excerpts from Ellison’s private diary.
Given this allegation, the DOJ seeks to prohibit all extrajudicial statements by witnesses and parties related to the case.
The Justice Department condemned Bankman-Fried for sharing Ellison’s reflections with a New York Times reporter. US prosecutors argued;
The defendant’s actions […] they imply the central concern of Rule 23.1 that the dissemination of material relating to the testimony or credibility of potential witnesses presumably implies a substantial probability or prejudice to a fair trial and the proper administration of justice.
According to prosecutors, Rule 23.1(a) prohibits lawyers and their clients from divulging private information about a case if it allegedly interferes with a fair trial.
Prosecutors have asked the court to issue an order restricting extrajudicial depositions due to the high media attention on the case. They also argue that the defendant could manipulate media coverage in his favor.
In addition, the DOJ said that Sam Bankman-Fried’s action may defame the jury and harass Ellison.
They expressed concern about fear of public harassment and tarnishing of personal image that deters potential trial witnesses from testifying.
FTX leadership sues Bankman-Fried and others, seeking to recover embezzled funds
The DOJ filing comes after FTX, under the leadership of CEO John Ray III, filed a civil case in the US Bankruptcy Court for the District of Delaware against SBF, Ellison and other executives.
The civil suit seeks to recover funds and reverse transactions worth more than $1 billion.
Filed on Thursday, July 20, the lawsuit alleges that the defendants abused their control over the FTX Group businesses to commit massive fraud from February 2020 through November 22.
He noted that Bankman-Fried and his accomplices squandered FTX’s assets on luxury homes, political and charitable donations, and other personal investments.
The lawsuit alleges that Sam Bankman-Fried diverted $10 million of funds from FTX.US into his portfolio.
He also alleged that Bankman-Fried’s brother, Gabriel, planned to purchase the island of Nauru with funds from the foundation.
FTX also alleged that the former CEO donated more than $100 million of company and client funds to political campaigns through fraudulent cash and stock transfers.
Additionally, according to the lawsuit, former Alameda CEO Ellison gave herself a $22.5 million bonus when FTX faced a significant cash crunch.
