U.S. judge asks for proposed orders restricting Bankman-Fried’s internet use

By Luc Cohen

NEW YORK, Feb 16 (Reuters) – A U.S. judge on Thursday asked prosecutors and Sam Bankman-Fried’s defense lawyers to send him proposed orders next week for new restrictions on the indicted FTX cryptocurrency exchange founder’s internet use while out on bail.

Federal prosecutors in Manhattan on Wednesday urged U.S. District Judge Lewis Kaplan to bar him from using the internet except to review evidence against him or use email on his Gmail account, citing his use of a virtual private network (VPN). Prosecutors say he may be trying to hide some of his online activity.

Bankman-Fried pleaded not guilty to fraud charges.

Kaplan has banned the 30-year-old former billionaire from contacting current or former employees at his now-bankrupt exchange and Alameda Research hedge fund, and from using encrypted messaging apps such as Signal that let users auto-delete messages.

On Tuesday, Kaplan banned Bankman-Fried from using VPNs which can disguise an internet user’s location.

But on Wednesday, prosecutors said the current conditions “leave too much room for inappropriate conduct.”

Prosecutors have raised concerns he may be trying to tamper with witnesses ahead of his October trial on charges of diverting billions of dollars in FTX customer funds to Alameda.

Bankman-Fried’s lawyers said his attempts to contact FTX’s current chief executive and general counsel were efforts to help, not interfere. They said he used a VPN to watch National Football League playoff games on an international subscription he had bought while living in the Bahamas.

The defense nonetheless proposed adding a bail condition that barred him from using a VPN unless one was needed to access evidence to prepare his defense. They proposed letting him communicate by phone, email, SMS text messaging and Twitter direct messaging, while disabling iMessage on his phone.

FTX collapsed in November as customers raced to withdraw funds amid concerns about commingling of their deposits with Alameda assets. Bankman-Fried has acknowledged inadequate risk management, but said he did not steal any funds.

(Reporting by Luc Cohen in New York; Editing by Matthew Lewis and Daniel Wallis)