Sam Bankman-Fried was blocked from using virtual private networks while out on bail, as a judge expressed concern that VPNs present similar risks to the FTX co-founder’s use of encrypted messaging apps. Bankman-Fried, who was charged with fraud after the cryptocurrency exchange collapsed, says he used a VPN just to watch football.
US District Judge Lewis Kaplan on Tuesday added the private networks, which hide a user’s IP address, to the list of technologies Bankman-Fried is barred from using. In a letter to Kaplan filed late Monday night, federal prosecutors said they recently discovered Bankman-Fried had used VPNs on two recent occasions.
The government said VPNs could be used to access international crypto exchanges, allow data transfers without detection and offer a covert method of getting onto the dark web.
The Big Game
In a letter early Tuesday morning responding to the government’s claims, Bankman-Fried’s attorney Christian Everdell said his client had used a VPN to watch NFL games through a subscription he purchased while living in the Bahamas.
“On January 29, 2023, he watched the AFC and NFC Championship games and on February 12, he watched the Super Bowl,” Everdell wrote. Those uses of the VPN aren’t relevant to any concerns raised by the government, the defense argued.
Kaplan had earlier expressed concern that Bankman-Fried could communicate with witnesses and other parties. The judge rejected a revised bail deal that would allow the FTX co-founder to use certain messaging apps, including WhatsApp, with technology that archived his messages, and also to make Zoom and FaceTime calls.
Kaplan scheduled a hearing for Thursday on revisions to the $250 million (roughly Rs. 2071) bail package.
Mary, Queen of Scots
At a hearing last week, Kaplan said he was concerned that without further restrictions, Bankman-Fried would easily find ways to shield communications with witnesses in the fraud case. He noted that encrypted letters sent by the imprisoned Mary, Queen of Scots, had only recently been deciphered.
“You don’t think this defendant is bright enough to encrypt something without a computer?” Kaplan asked in court. He suggested prosecutors’ focus on encryption apps like Signal was “short-sighted.”
Bankman-Fried, who has pleaded not guilty, is accused of committing a yearslong fraud at FTX, allowing customer funds to be used for trading at affiliated hedge fund Alameda Research and for personal expenses. He is living in his parents’ house in Palo Alto, California, after being released from custody in December.
The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).
© 2023 Bloomberg LP