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FTX Bankman Fried with SDNY Pitches New Deal Including Using Zoom SQL Python

By Matthew Russell Lee, Patreon Maxwell book

SDNY COURTHOUSE, March 3 – Sam Bankman-Fried of FTX was indicted in the U.S. District Court for the Southern District of New York, leading to his arrest in the Bahamas on December 12, and extradition to the US on December 21.

On February 28, with Bankman-Fried free on bond, FTX's Nishad Singh pleaded guilty to six criminal charges. Inner City Press put the charging document on its DocumentCloud here.

On March 1, Bankman-Fried's lawyers and the SDNY prosecutors - together - proposed to Judge Kaplan two candidates as his technical expert: Edward Stroz ($695/hr) and Michael McGowan ($650/hr). We'll have more on this - for now, more on Substack here

On March 3, the US Attorney's Office which chose to give Bankman-Fried freedom on bond then declined to seek remand proposed to Judge Kaplan conditions: "Dear Judge Kaplan: The Government writes on behalf of the parties with proposed modifications to the defendant’s conditions of release intended to address outstanding issues raised at the last conference. First, the parties propose that the temporary conditions imposed by the Court be adopted as part of the defendant’s bail conditions, namely: 1. The defendant shall not contact or communicate with current or former employees of FTX or Alameda (other than immediate family members) except in the presence of counsel, unless the Government or Court exempts an individual from this rule in writing. 2. The defendant shall not use any encrypted or ephemeral call or messaging application, including but not limited to “Signal.” 3. The defendant is prohibited from using a VPN, except as explicitly authorized in his bail conditions, as described below. Second, the parties propose that the defendant be limited to the use of the following devices, and that he otherwise be prohibited from using any other cellphones, tablets, computers, video games (including video game platforms and hardware) that permit chat and voice communication, or smart devices with internet capability: 1. A flip phone or other non-smartphone with either no internet capabilities or internet capabilities disabled. The phone’s serial number, IMEI number, IMSI number, MAC address, and SIM number will be provided to the Court and the Government. The communication function on the phone will be limited to SMS text messages and voice calls and all other message applications will be prohibited. The Silvio J. Mollo Building  One Saint Andrew’s Plaza New York, New York 10007 U.S. Department of Justice United States Attorney Southern District of New York Case 1:22-cr-00673-LAK Document 100 Filed 03/03/23 Page 1 of 4 Page 2 2. A new laptop with the limited functionalities addressed below. The laptop’s serial number, MAC address, and IP address will be provided to the Court and the Government in the event the Court approves use of such a device. Third, with respect to the defendant’s computer usage, the parties propose that the defendant’s new laptop be configured so that he is only able to log on to the internet through the use of specified VPNs, and that the VPNs only permit the defendant to access websites that have been whitelisted through the VPNs. Specifically, an authorized VPN installed on the laptop would allow the defendant to access the cloud-hosted FTX read-only database that has been provided as part of discovery. Additionally, a VPN installed by defense counsel’s law firm on to the laptop would allow access to the internet only through the use of the VPN and only to the specifically whitelisted sites. The parties agree that the following websites would be whitelisted through the law firm VPN: the Relativity database hosted by defense counsel for purposes of reviewing discovery; Google Drive and Google Docs, which defense counsel uses with clients to share information; Gmail, which will be accessed through a single email address provided to the Court and the Government, and no other; and the enclosed list of websites proposed by the defendant. The list of websites is divided into two categories: websites the defense submits are necessary to the defendant’s participation in the preparation of his defense, and websites the defendant would like to use for other purposes that the Government has determined do not pose a risk of danger to the community, including because they lack a private communication platform and do not pose a risk of accessing/transferring cryptocurrency assets. The parties further propose that the following applications be permitted on the defendant’s laptop: a. Zoom, only to be used with defense counsel; b. Microsoft Office; c. Adobe Acrobat; d. Screenshot tool; e. Notepad and Notepad++; f. 1password; g. Python (to read the FTX codebase); h. SQL tool (for running queries on the FTX read-only database); and i. Web browser used to access the internet consistent with the provisions set forth in this letter." Full letter on Patreon here.

Bankman-Fried was released on $250 million bond - and reappeared on January 3, see below - with the requirement of co-signers.

But he wanted them secret: "LETTER MOTION addressed to Judge Lewis A. Kaplan from Mark S. Cohen dated January 3, 2023 re: Request to Redact Names and Identifying Information for Certain Bail Sureties." Six page letter on Patreon here -
Inner City Press nearly immediately opposed, here. That was Docket Number 31. And it ultimately prevailed, see below.

On February 23, SBF was hit with new charges in a superseding indictment: bank fraud and operating an unlicensed money transmitter  “falsely represented to a financial institution that the [North Dimension] account would be used for trading and market making,” when in fact it was to be used to receive and transmit customer funds.  SBF et al. “agreed to and did make corporate contributions to candidates and committees in the Southern District of New York that were reported in the name of another person." Inner City Press quickly published the superseder here.

On the evening of February 23, the US Attorney's Office wrote to Judge Kaplan about the two new charges, stating that "The Government respectfully suggests that the Court arraign the defendant on the S3 Indictment at the next court appearance that arises, or at the scheduled oral argument on May 18, 2023, whichever comes first. The Government requests that the Court exclude time under the Speedy Trial Act to October 2, 2023, the first day of trial." Letter on Patreon here.

Back on January 30, Judge Kaplan granted the motion to unseal - but stayed the order until February 7 to allow for an appeal. Inner City Press (Matthew Russell Lee, intervenor pro se) unloaded the order to DocumentCloud here

At 2 pm on February 7, Bankman-Fried's lawyers filed notice of their appeal to the Second Circuit, to (try to) keep the names secret.

But on February 15, Judge Kramer ordered unsealing: "ORDER as to Samuel Bankman-Fried, Zixiao (Gary) Wang, Caroline Ellison. On January 30, 2023, the Court issued an order granting the motions of several news organizations to unseal the names of defendant's non-parental bail sureties. (Dkt 57) Given the novelty of the question presented and the likelihood of appeal, the Court stayed the order "until 5 p.m. on February 7, 2023 and, if a notice of appeal from th[at] order [was] filed by then, until February 14, 2023 at 5 p.m. in order to permit an application for a further stay to be made to the Court of Appeals should any adversely affected party wish to file one." (Dkt 57, at 12.) On February 7, 2023, Defendant timely filed a notice of appeal from the January 30, 2023 Order. As of today, however, no application for a further stay has been made to the Court of Appeals. Accordingly, the Clerk shall file on the unrestricted public record complete copies of the redacted bonds previously docketed as Dkt 55 and 56. SO ORDERED. (Signed by Judge Lewis A. Kaplan on 2/15/2023)."

  Inner City Press published that - and then the two names: Larry Kramer, former dean of Stanford Law, and Andreas Paepcke of Stanford InfoLab, photos here and here. Watch this site.

The case is US v. Bankman-Fried, et al., 22-cr-673 (Kaplan) 


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