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Leo Schwartz

‘I’ve read all the spy novels’: Judge and Sam Bankman-Fried's lawyers spar over his use of messaging apps

(Credit: Jane Rosenberg—Reuters)

On Thursday morning, Sam Bankman-Fried arrived at the Moynihan Courthouse in Lower Manhattan with his two lawyers in tow, ready to defend his right to communicate through messaging applications while under house arrest. 

The disgraced FTX founder’s use of electronics has proved contentious throughout his criminal trial, which began in December after the U.S. Department of Justice charged him with eight counts related to the collapse of the crypto exchange, including wire fraud and campaign finance regulation violations.  

As part of his bail conditions, Sam Bankman-Fried was permitted to continue using the internet, a privilege he has seemingly enjoyed—he went so far as to create a Substack in mid-January. Prosecutors were less amused when they found out he had been emailing and messaging former employees through the encrypted messaging app Signal, including FTX US’s general counsel and John Ray III, the current CEO of FTX who took over after the exchange declared bankruptcy in November.  

Over both Signal and email, Bankman-Fried wrote to Ryne Miller, the general counsel for FTX US, that he wanted to reconnect and see if they could find a way to have a “constructive relationship.” Prosecutors, who plan to call Miller to testify at Bankman-Fried's hearing in October and have deemed Miller “Witness-1," have interpreted Bankman-Fried's outreach as witness tampering, according to court filings.  

In late January, prosecutors sought to update Bankman-Fried's bail conditions to prevent him from communicating with current or former employees at FTX and Alameda, except in the presence of counsel, as well as using encrypted or ephemeral messaging apps, such as Signal. Judge Lewis Kaplan agreed to the new stipulations on Feb. 1 that would limit Bankman-Fried's communication privileges, and later denied a compromise reached by prosecutors and Bankman-Fried's defense team to loosen the conditions, instead calling for the Thursday hearing to discuss the matter.

Prosecutors had agreed to allow Bankman-Fried to use certain apps like WhatsApp if he installed monitoring software on his phone, while denying his use of other encrypted apps like Signal. But Kaplan took exception with the definition of “encrypted,” questioning whether prosecutors were aware of Bankman-Fried's potential ability to skirt any proposed conditions. As Kaplan told the assembled lawyers, “I have read all the spy novels.”

He also cited a recent breakthrough by researchers to finally decrypt encoded letters written by Mary, Queen of Scotts during her imprisonment in the 16th century—incognito messaging that managed to escape notice for centuries—as an example of how Bankman-Fried could elude prosecutors by using other means of communication.

Danielle Sassoon, an assistant US attorney, said she was confident that prosecutors would be able to decode any letters sent by Bankman-Fried if necessary.  

After a back-and-forth about the various updates to deleted text capabilities on iMessage that recalled a visit to the Apple Genius Bar, the two teams of lawyers agreed that they would settle on a list of accepted communication methods, as well as the monitoring software that would ensure that Bankman-Fried could not delete any messages from WhatsApp.  

Although Kaplan seemed skeptical that Bankman-Fried should be allowed any electronic communication at all, given his track record of questionable contact, he agreed to extend his order on the matter until Feb. 21, pending the submission of recommendations from both teams.  

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