By Jonathan Stempel
NEW YORK (Reuters) - U.S. prosecutors on Friday asked a Manhattan judge to impose tougher bail conditions on Sam Bankman-Fried, expressing concern that the founder of the FTX cryptocurrency exchange might tamper with witnesses or destroy evidence in his criminal case.
Citing Bankman-Fried's "recent attempts to contact prospective witnesses," prosecutors asked U.S. District Judge Lewis Kaplan to ban Bankman-Fried from communicating with current or former employees of FTX or his Alameda Research hedge fund, other than family, unless a lawyer is present.
They also asked that Bankman-Fried not use Signal or other encrypted call and messaging applications, though he could still communicate through text messages, email and the phone.
Bankman-Fried, 30, has been free on $250 million bond and required to live with his parents since pleading not guilty to looting billions of dollars from the now-bankrupt FTX.
Lawyers for Bankman-Fried did not immediately respond to requests for comment.
In Friday's letter, prosecutors cited a Signal message on Jan. 15 from Bankman-Fried to "Witness-1," the general counsel of the FTX U.S. affiliate. Bankman-Fried expressed interest in having a "constructive relationship" or "at least vet things with each other."
Prosecutors said this was "particularly concerning" because Bankman-Fried knew the general counsel had potentially damaging information, having participated just before FTX's November collapse in communications in which Bankman-Fried discussed using Alameda funds to satisfy FTX customer withdrawals.
"The defendant's request to 'vet things with each other' is suggestive of an effort to influence Witness-1's potential testimony, and the appeal for a 'constructive relationship' likewise implies that Witness-1 should align with the defendant," prosecutors said.
"Even if the defendant has not directly attempted to tamper with witnesses, (his) contact with witnesses may intimidate them" into not coming forward or testifying, prosecutors added.
In seeking to keep Bankman-Fried off Signal, prosecutors said he had in 2021 directed that many Signal and Slack communications be autodeleted within 30 days.
Prosecutors said former Alameda chief Caroline Ellison, who pleaded guilty in the case and is cooperating with them, told them Bankman-Fried had indicated it could be harder to build legal cases if information were not preserved.