Federal prosecutors want to send Sam Bankman-Fried back in time, technologically speaking.
The U.S. Department of Justice (DOJ) has recommended that the accused cryptocurrency fraudster be limited to the use of a flip phone without internet access, and a basic laptop, Reuters reported Saturday (March 4), citing court documents.
The recommendation is part of a court proceeding to help decide the terms of Bankman-Fried’s bail, with Judge Lewis Kaplan last month threatening to revoke that bail if the former FTX CEO couldn’t comply with tighter restrictions on his electronics communications.
Under the terms of the proposal from the DOJ, Bankman-Fried, 30, would be allowed to use a flip phone or non-smartphone that can make voice calls and send texts, Reuters said.
His laptop, meanwhile, would be restricted to specific virtual private networks (VPNs), and a variety of websites covering news, sports and food delivery, and to help Bankman-Fried get ready for his trial, which is expected to begin in October.
Bankman-Fried is accused of multiple criminal counts, including wire fraud, bank fraud, and campaign finance violations connected to last year’s collapse of the FTX cryptocurrency exchange, which he helped found.
He has been free on $250 million bail since his arrest and arraignment — and living at his parents’ home on the grounds of Stanford University — but has come under fire from the prosecution over what they allege is improper use of a VPN.
His court case is happening amid a period of seismic shifts for the cryptocurrency sector, as PYMNTS noted last week.
“The ecosystem keeps evolving, but in recent days it feels like the evolution is being dictated by flameouts, by crumbling business models, by looming regulations that determine what people and firms cannot do (and are less about what folks can do) when it comes to using digital currencies, holding them, storing them, and whether any of it is really safe,” PYMNTS wrote.
The latest development on this front came this week when Silvergate Capital acknowledged in a regulatory filing that a series of bank runs and its efforts to raise liquidity have led to concerns about its very viability.
As PYMNTS wrote, the citation highlights the difficulty of offering traditional banking when a bank’s fortunes depend on volatile cryptocurrencies, “which are in turn subject to the great unknowns of regulatory scrutiny.”
In this case, Silvergate Capital’s crisis underlines the fact that the link between cryptocurrency and traditional banking is deteriorating and may never be repaired, at least not if regulators get their way, PYMNTS wrote.
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