Federal judge unhappy that FTX’s Sam Bankman-Fried used virtual private network (VPN) whilst under house arrest
The legal drama surrounding former crypto multi-billionaire Sam Bankman-Fried took a fresh twist this week, after a federal judge ordered him to return to court.
Former CEO and co-founder of FTX, Bankman-Fried has been under house arrest since he pleaded not guilty to federal fraud and conspiracy charges over his role in the collapse of the FTX crypto exchange, when a multi-billion dollar hole was found in its balance sheet.
Bankman-Fried faces a possible 115 years in prison. His trial is scheduled to begin on 2 October this year.
But before that trial begins, CNN reported that Judge Lewis Kaplan has ordered Bankman-Fried to appear before his court on Thursday for a hearing.
He was call back to court after the judge was notified that Bankman-Fried had used a virtual private network (VPN) twice in the past month – days after the judge had expressed concern about the use of encrypted messaging apps.
The concern centres around the fact that the US government cannot track the Internet use of Bankman-Fried if he uses a VPN.
According to CNN, Bankman-Fried’s lawyers said in a letter to the judge that Bankman-Fried had used the VPN to access an NFL Game Pass international subscription that he used when he lived in the Bahamas to watch NFL playoff and Super Bowl games while out on bail in the US.
Following his extradition to the United States from the Bahamas, Bankman-Fried had been freed on a $250m bail just before Christmas 2022, but was ordered to remain under strict supervision at his parents’ home in Palo Alto, California, and wear an ankle bracelet.
Judge Lewis Kaplan noted that Bankman-Fried had used the VPN at least once after he was ordered to refrain from using encrypted messaging apps, adding, “The defendant’s use of a VPN presents many of the same risks associated with his use of an encrypted messaging or call application.”
The judge said Bankman-Fried could not use VPNs until the outcome of the Thursday hearing.
According to CNN, prosecutors had alerted the judge to Bankman-Fried’s use of a VPN in late January and early February.
“The use of a VPN raises several potential concerns. First, a VPN is a mechanism of encryption, hiding online activities from third parties, including the Government. Second, it is a means to disguise a user’s whereabouts because a VPN server essentially acts as a proxy on the internet,” prosecutors reportedly wrote in a letter to the judge.
“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 US users,” they wrote.
Prosecutors and Bankman-Fried’s lawyers asked the judge for more time to work out new bail terms, but the judge rejected that, calling them back to court for the second time in a week.
CNN reported that Judge Kaplan has previously expressed concern over Bankman-Fried’s use of encryption and whether the government could track what he was doing while out on bail.