FTX’s Sam Bankman-Fried Used VPN to Access Internet Recently, Could Be Hiding Online Activity: US Prosecutors

The former FTX CEO is out on bail and is barred from using encrypted messaging apps like Signal.

By Peter Blumberg, Bloomberg | Updated: 14 February 2023 14:47 IST

FTX’s Sam Bankman-Fried Used VPN to Access Internet Recently, Could Be Hiding Online Activity: US Prosecutors

Photo Credit: Reuters

Bankman-Fried is allowed to only contact a specific set of former and current FTX employees

Highlights

Bankman-Fried can use WhatsApp with monitoring technology
VPNs can provide access to international cryptocurrency exchanges
Bankman-Fried has been living at his parents’ house in Palo Alto

US prosecutors said their discovery that Sam Bankman-Fried used a virtual private network to access the internet on two recent occasions raises concerns that the FTX co-founder could be hiding his online activities. The Manhattan judge handling Bankman-Fried's criminal fraud case last week expressed his own concerns that even if the defendant is barred from using encrypted messaging apps like Signal, he could still use old-fashioned secret code to contact witnesses in the case, similar to letters penned by Mary, Queen of Scots, more than 400 years ago.

US District Judge Lewis Kaplan refused on February 9 to approve an agreement negotiated between prosecutors and Bankman-Fried that would have required him to stop using Signal and certain other apps and to only contact a specific set of former and current FTX employees, while preserving his right to use WhatsApp with monitoring technology, iMessage and also make Zoom and FaceTime calls.

In a letter to the judge late Monday, a prosecutor in the office of the Manhattan US attorney said the government is discussing with lawyers for Bankman-Fried how to fashion internet ground rules acceptable to both sides and the court.

SEC, CFTC's Civil Cases Against FTX’s Sam Bankman-Fried Put on Hold

“As defence counsel has pointed out, and the government does not dispute, many individuals use a VPN for benign purposes,” Assistant US Attorney Danielle Sassoon wrote. “In the government's view, however, the use of a VPN raises several potential concerns.”

A VPN is a mechanism of encryption that hides online activities from third parties and disguises a user's whereabouts, Sassoon wrote, adding that such networks provide access to international cryptocurrency exchanges, allow data transfers without detection and offer a covert method of getting onto the dark web.

The defence team has said that Bankman-Fried won't use a VPN while discussions continue, the prosecutor told the judge.

FTX Founder Continues to Talk Despite Upcoming Fraud Trial in October

Bankman-Fried has been living at his parents' house in Palo Alto, California, after being released from custody in December on a $250 million (roughly Rs. 2,070 crore) bail package. He is accused of committing a yearslong fraud at FTX and allowing customer funds to be used for trading at affiliated hedge fund Alameda Research and for personal expenses.

The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).

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