FTX founder Sam Bankman-Fried has been sent back to prison less than two months before his fraud trial, after a judge alleged he had attempted to tamper with witnesses.

The disgraced cryptocurrency tycoon has pleaded not guilty to charges of wire fraud and conspiracy to commit money laundering, as well as election finance violations, in connection with the spectacular collapse of his firm last year.

Along with its sister hedge fund Alameda Research, FTX went bankrupt in November. At one point, the virtual trading business had been valued by the market at $US32 billion ($A49.2 billion).

Justifying the revocation of the 31-year-old’s bail, US District Judge Lewis Kaplan cited “probable cause … that the defendant has committed the federal crime of attempted witness tampering”, according to the ruling.

“There is no condition or combination of conditions of release that will assure that the defendant will not pose a danger to other persons or the safety of the community,” it reads.

Prosecutors said Bankman-Fried “crossed a line” when he spoke to The New York Times about his ex-girlfriend, former Alameda CEO Caroline Ellison, saying it amounted to witness intimidation. Ellison, who is a co-operating witness in the government’s case, was described by The Times as its star witness.

Bankman-Fried allegedly had more than 100 calls with one of the paper’s reporters, and was accused of “intending to portray a key cooperator testifying against him in a poor and inculpatory light”, according to a letter filed on July 28 by the Department of Justice.

It added Bankman-Fried’s comments were akin to “improperly influencing those prospective jurors and intimidating a witness and sending a message to other prospective witnesses”.

“Witness tampering is not constitutionally protected speech.”

Responding to the decision, Bankman-Fried’s lawyers said the government’s position flouted the First Amendment and that returning him to jail would mar his ability to mount a defence.

Bankman-Fried, who is also facing charges that he authorised bribes of at least $US40 million ($A61.5 million) to Chinese officials in a bid to unfreeze Alameda-controlled trading accounts, is due to go on trial in early October.

Before the ruling on Friday local time, Bankman-Fried had largely been confined to his parent’s California home, released on $US250 million ($A384.5 million) bail.

The former FTX chief, who appeared on the covers of finance and tech magazines, is accused of cheating investors and misusing funds that belonged to his trading businesses’ clients.

Once likened by Fortune to Warren Buffett, it all imploded dramatically when reports emerged that Alameda’s balance sheet was heavily built on a token created by FTX with no independent value – exposing his companies as being dangerously interlinked.

Bankman-Fried was arrested in the Bahamas on December 12 at the request of federal prosecutors in New York.


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By Rahul

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