The judge overseeing Sam Bankman-Fried’s fraud trial expressed concern that he could use secret code to contact witnesses in the case even if he’s barred from using encrypted messaging apps like Signal.
(Bloomberg) — The judge overseeing Sam Bankman-Fried’s fraud trial expressed concern that he could use secret code to contact witnesses in the case even if he’s barred from using encrypted messaging apps like Signal.
“You don’t think this defendant is bright enough to encrypt something without a computer?” Judge Lewis Kaplan asked prosecutors during a Thursday hearing in Manhattan federal court. Kaplan noted the recent decryption of coded letters written by Mary, Queen of Scots, more than 400 years ago.
The FTX co-founder, who appeared in court Thursday but remained silent, had negotiated new bail conditions with prosecutors after they raised concern about his contacts with the bankrupt cryptocurrency exchange’s US general counsel and its current chief executive officer. Bankman-Fried agreed not to use Signal and certain other apps and also only contact a specific set of former and current FTX employees.
But Kaplan refused to accept the deal. which would still allow Bankman-Fried to use WhatsApp with monitoring technology, iMessage and also make Zoom and FaceTime calls.
Citing reports yesterday about letters by the 15th Century Scottish monarch that were only deciphered recently, the judge pointed out that those “were encrypted without the use of any app.” Perhaps “we’re being a little bit short-sighted in focusing on apps,” he said.
But federal prosecutor Danielle Sassoon said the government was not concerned about Bankman-Fried communicating with handwritten code. Defense attorney Christian Everdell said negotiations had focused more on his client’s possible use of ephemeral apps that didn’t preserve messages.
“We are trying to find the methods that don’t present that problem,” Everdell said. The defense will have further discussions with the government about whether the monitoring technology applied to WhatsApp can be applied to other apps Bankman-Fried will be permitted to use as well.
Kaplan extended an earlier order that restricted Bankman-Fried from using all encrypted applications and from contacting former and current FTX employees to February 21.
Bankman-Fried has been living at his parents’ house in Palo Alto, California, after being released from custody in December on a $250 million bail package. He is accused of committing a yearslong fraud at FTX and allowing customer funds to be used for trading at affiliated hedge fund Alameda Research and for personal expenses.
The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).
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