FTX's Bankman-Fried denies witness tampering, accepts gag order

By Mrinmay Dey

(Reuters) -Lawyers for FTX founder Sam Bankman-Fried rejected prosecutors' claims that his discussions with a New York Times reporter amounted to witness tampering but agreed to accept a gag order, they said in a letter to the judge in the criminal fraud case.

The letter, released on Sunday, came after prosecutors sought to bar Bankman-Fried and allies from making public statements that could interfere with the case. The defense asked that the order also apply to prosecutors and potential witnesses, namely FTX Chief Executive Officer John Ray.

U.S. District Judge Lewis Kaplan is set to consider the possible order during a Wednesday hearing in federal court in Manhattan.

Cryptocurrency exchange FTX, once valued at $32 billion, filed for bankruptcy in November. Bankman-Fried has pleaded not guilty to charges he stole customer funds, and is set to go on trial on Oct. 2.

In the letter, Bankman-Fried's lawyer Mark Cohen confirmed his client had spoken with a New York Times reporter and provided documents written by a former colleague, Caroline Ellison, who has cooperated with prosecutors.

The July 20 Times article reported excerpts from Ellison's personal Google documents from before the collapse of FTX in which she spoke about being "pretty unhappy and overwhelmed" with her job and feeling "hurt/rejected" from her breakup with Bankman-Fried.

Ellison led Bankman-Fried's Alameda Research hedge fund and has pleaded guilty to defrauding investors. In December, Bankman-Fried said he and Ellison had been in a relationship but gave no further details.

Cohen said Bankman-Fried's conduct "did not violate the protective order in this case, nor did he violate his bail conditions, nor did he violate any law or rule."

In arguing the order should also apply to Ray, Cohen said bankrupt FTX's current leader has "attacked and vilified" Bankman-Fried, pointing to his comment that the "villains" in the FTX case were being pursued by authorities and his statement that Bankman-Fried lied to keep up a "digital con game."

A spokesperson for the FTX debtors declined to comment. A spokesman for the U.S. Attorney's office in Manhattan, which is prosecuting the case, did not immediately respond to a request for comment.

(Reporting by Mrinmay Dey; Additional reporting by Luc Cohen in New York; Editing by Christopher Cushing and Jonathan Oatis)