Former FTX chief executive Sam Bankman-Fried leaves federal court, in New York, on Feb. 9.MIKE SEGAR/Reuters
A federal judge on Tuesday ordered Sam Bankman-Fried not to use a virtual private network to access the internet, after prosecutors expressed concern the FTX cryptocurrency exchange founder might try to hide his online activities.
U.S. District Judge Lewis Kaplan imposed the VPN ban through Thursday, when he will hold a hearing to consider additional restrictions to Bankman-Fried’s $250-million bail package.
Kaplan previously banned Bankman-Fried from using encrypted messaging apps such as Signal that let users auto-delete messages, and said using a VPN, which Bankman-Fried had done recently at least twice, “presents many of the same risks.”
The judge had on Feb. 9 rejected a proposed agreement letting Bankman-Fried contact specific though unnamed FTX workers, and communicate by phone, email, Zoom and FaceTime, as well as WhatsApp with monitoring technology.
Kaplan has temporarily barred the 30-year-old former billionaire from contacting current or former employees at his exchange and Alameda Research hedge fund. The judge on Tuesday extended that ban by three days, to Feb. 24.
Bankman-Fried has pleaded not guilty to eight criminal charges including wire fraud and money laundering conspiracy, carrying a maximum 115-year prison sentence.
Prosecutors said Bankman-Fried cheated customers and improperly diverted assets, causing billions of dollars in losses. FTX filed for Chapter 11 bankruptcy in November.
Defense lawyers and prosecutors have been negotiating Bankman-Fried’s electronics use pending his scheduled October trial.
In a Monday night filing, prosecutors said Bankman-Fried used a VPN to access the internet on Jan. 29 and Feb. 12.
“As defense counsel has pointed out, and the government does not dispute, many individuals use a VPN for benign purposes,” but there remain “several potential concerns,” prosecutor Danielle Sassoon wrote.
“For instance, it is well known that some individuals use VPNs to disguise the fact that they are accessing international cryptocurrency exchanges that use IPs to block U.S. users,” she added.
Defense lawyers responded that Bankman-Fried used a VPN to watch National Football League playoff games on Jan. 29 and the Super Bowl on Feb. 12. They also pledged he would not use a VPN “in the interim.”