February 2023 - cypherpunks@lists.ogf.org

Re: Larson FOIL 5th Extension (letter (Richard Weber - General Counsel, NY-DFS)
by Gunnar Larson 02 Feb '23

02 Feb '23

Thank you very much. Gunnar Gunnar Larson xNY.io - Bank.org 646-454-9107 On Thu, Feb 2, 2023, 1:36 PM Garvin, Sheila Y (DHR) < Sheila.Garvin(a)dhr.ny.gov> wrote: > Dear Mr. Larson: > > > > Pursuant to your request, please see the attached. > > > > *Best,* > > > > *Sheila Garvin* > > > > *DHR Records Access Clerk* > > *Legal Management Records Unit* > > One Fordham Plaza, 4th Floor, Bronx, NY 10458 > > Tele: (718) 741-8423/ e-Fax: (718) 741-8256 > > *foil(a)dhr.ny.gov <foil(a)dhr.ny.gov>* > > *Sheila.Garvin(a)dhr.ny.gov <Sheila.Garvin(a)dhr.ny.gov>* > > *www.dhr.ny.gov <http://www.dhr.ny.gov/>* > > > > *This transmission and its attachments may contain confidential or > privileged information, which is intended for use by the individual or > entity to which the transmission is addressed. If you are not the intended > recipient, you are hereby notified that any disclosure, dissemination, > copying, or distribution of this transmission or its attachments is > strictly prohibited. If you have received this transmission in error, > please notify the sender immediately at the above address and delete the > transmission and its attachments**.* > > > > > > > > >

1 0

18 States Send a Message to FTX Bankruptcy Judge John Dorsey: We’re Watching You
by Gunnar Larson 02 Feb '23

02 Feb '23

"By Pam Martens and Russ Martens: February 2, 2023 ~ John T. Dorsey (2016 Photo from Internet Archives’ Wayback Machine) A showdown in the Delaware bankruptcy proceedings for Sam Bankman-Fried’s collapsed crypto exchange, FTX, before presiding Judge John Dorsey is scheduled for next Monday morning at 9:30. (You can listen to the hearing live at this link. Just turn on your speakers and click on the box with the flag.) The battle lines have been drawn for the showdown – but not in the manner that Big Law firm, Sullivan & Cromwell, had hoped. The U.S. Trustee, who represents the U.S. Department of Justice in bankruptcy cases, has been asking Judge Dorsey to agree to the appointment of an independent examiner in the case since December 1. And over the presiding two months, the deeply conflicted Sullivan & Cromwell law firm has been aggressively opposing the U.S. Trustee’s pursuit of an independent examiner. Yesterday, a Joinder was filed by the securities regulator of Texas, supporting the motion by the U.S. Trustee. The joinder included letters from 15 other state securities regulators and Washington, D.C., also supporting the appointment of an independent examiner. The states included the three largest U.S. states by population: California, Texas and Florida. The states of Wisconsin and Vermont had previously filed their own joinders requesting the appointment of an independent examiner, meaning that the position of the U.S. Trustee is currently being advocated by 18 state securities regulators and the District of Columbia. In the joinder filed by Wisconsin’s Attorney General and state securities regulator on December 21, it made the following points: “Here, the [bankruptcy] estate, creditors, and society writ large would benefit from the investigation of a neutral, third-party, as the U.S. Trustee’s motion argues. As part of the broader societal interest, state and federal government regulators would benefit from a neutral fact-finder’s investigation, which would enable them to learn from a disinterested source what happened and how it happened under the current regulatory framework (or lack thereof to address this particular industry). These answers are necessary so that government regulators can put into place an effective regulatory framework to ensure that something like this — a colossal fraud costing billions of dollars in economic waste — never happens again.” The U.S. Trustee has another pesky detail on its side: the appointment of an examiner is mandatory under U.S. Bankruptcy Code Section 1104 if requested by the U.S. Trustee and the debtor meets the statutory debt threshold of $5 million or greater. (FTX and its more than 100 affiliated companies owe billions of dollars in debts to investors and customers.) In the latest court filing yesterday by the U.S. Trustee, it explains that every U.S. District Court to publish a decision on this issue has agreed that the appointment of an independent examiner is mandatory under the terms of Section 1104 of the U.S. Bankruptcy Code. The only Court of Appeals to issue a published opinion, the Sixth Circuit, has taken the same view. Notwithstanding the plain language of the law and legal precedent, Judge Dorsey previously stated in open court during a hearing that he doesn’t believe the appointment of an independent examiner is mandatory. Bench rulings (an unpublished ruling by a Judge which carries no weight in terms of legal precedent) in the Delaware bankruptcy district have also taken the position that the appointment of an independent examiner is not mandatory. (This might explain why Sullivan & Cromwell law partners are arguing their case in U.S. Bankruptcy Court in Delaware instead of in Manhattan where their office is located.) Damian Williams, the U.S. Attorney for the Southern District of New York, whose office is prosecuting the criminal case against former FTX CEO Sam Bankman-Fried (who has pled not guilty) and two other executives, Caroline Ellison and Gary Wang (who have pled guilty and are cooperating with prosecutors) has called the FTX collapse “one of the biggest financial frauds in American history.” The new CEO of FTX, John Ray, testified to the House Financial Services Committee on December 13 that $8 billion of customer funds are missing. On the basis of those facts alone, one would think that Judge Dorsey would be anxious to comply with the Justice Department’s U.S. Trustee and quickly agree to the appointment of an independent examiner. Instead, and despite the fact that Sullivan & Cromwell has filed multiple declarations revealing raging conflicts of interest in the case, Judge Dorsey has ignored multiple objectors and signed an order allowing the law firm to become the lead counsel in the bankruptcy proceedings – which effectively puts the firm in charge of investigating its own conduct. In a filing with the bankruptcy court, an FTX customer, Warren Winter, described the situation as the fox guarding the henhouse, writing: “Sullivan & Cromwell was one of the FTX Group’s ‘primary external law firms’ before the FTX Group collapsed. To date, the FTX Group has paid the firm more than $20.5 million in fees and retainers. Now, in the most flagrant attempt by a fox to guard a henhouse in recent memory, Sullivan & Cromwell has applied to be appointed the FTX Group’s bankruptcy counsel with duties that would include ‘investigating all potential estate causes of action’….” Sullivan & Cromwell belatedly owned up in court filings to personally representing Sam Bankman-Fried – the man charged under an 8-count indictment by the Department of Justice with being the kingpin of this alleged international crypto fraud enterprise. On January 17, Sullivan & Cromwell law partner, Andrew Dietderich, filed a document with the bankruptcy court acknowledging that the law firm had not only done extensive legal work for FTX but personally represented Sam Bankman-Fried from April 14, 2022 through August 5, 2022. The disclosure noted that “This matter was arranged, and paid for, by Alameda,” a reference to Alameda Research, Bankman-Fried’s hedge fund which prosecutors have alleged he used to loot FTX customer funds. The specific nature of the work Sullivan & Cromwell did for Bankman-Fried involved “a position that had been established in the stock of Robinhood Markets, Inc.” according to the Dietderich declaration. That stock position totaled more than half a billion dollars. According to a letter from federal prosecutors recently filed in the criminal case, a foreign special purpose vehicle was set up in the Robinhood stock matter, to “obscure his criminal misuse of FTX customer property.” The independent examiner would certainly want to know what lawyer and/or law firm created that offshore vehicle. Sullivan & Cromwell has also conceded that it did legal work on a multitude of transactions and regulatory matters for FTX and had collected legal fees and expenses of $8,564,487.50 from FTX and its affiliates over the prior 16 months, plus a $12 million retainer for bankruptcy work. State attorneys general and state securities regulators representing more than a third of the population of the United States are going to be watching carefully to see what Judge Dorsey has to say at the hearing on Monday." https://wallstreetonparade.com/2023/02/18-states-send-a-message-to-ftx-bank…

1 0

The 6th Anniversary of the Peter Thiel / Hulk Hogan / Gawker Case: What Have We Learned? - Litigation Finance Journal
by Gunnar Larson 02 Feb '23

02 Feb '23

"This week marks the sixth anniversary of Terry Bollea (AKA professional wrestler Hulk Hogan) suing Gawker media for publishing a sex tape of him with a married woman. The suit made national news not just for its salacious nature—but because of the questions it raised regarding privacy versus journalistic freedom. Once news emerged that billionaire and PayPal co-founder Peter Thiel was funding Hogan’s claim, the case became even more sensational. In this piece, we’ll take a look at exactly what happened in the case, and how it impacted (or hasn’t impacted) Litigation Finance. The Facts of the Case In 2007, Gawker, a website known for celebrity scandals and salacious content, published a piece with the headline: “Peter Thiel is totally gay, people.” Was this newsworthy? Did the piece have journalistic integrity? Reasonable people can disagree. Peter Thiel is in fact gay, which means the truth of the article protected Gawker from a libel suit. In 2009, an outed Thiel gave an interview in which he called Gawker ‘destructive,’ even as he acknowledged that the site wasn’t focused on ruining him personally. Thiel also speculated that Gawker maintained a disdainful attitude toward Big Tech, and may be focusing on punishing industry leaders as a result. Fast forward to 2012, when Gawker published a lewd video featuring wrestler Hulk Hogan (AKA Terry Bollea) having sex with Heather Clem—wife of radio personality “Bubba the Love Sponge.” This led to Bollea suing the media outlet for infringement of rights of publicity, invasion of privacy, and intentional infliction of emotional distress. Bollea was represented by famed Los Angeles attorney Charles Harder. The published video, which Bollea claims was recorded without his knowledge or consent, contained a 2-minute section of a 30+ minute video—ten seconds of which included explicit sex acts. In 2016, Forbes magazine revealed that it was indeed Peter Thiel who was bankrolling Bollea’s case against Gawker. Speculation soared over what was viewed by many as Thiel’s revenge against Gawker for outing him. Did he want to ruin the media company, or purchase it, or simply malign the company that caused him personal and professional anguish? Thiel maintained that his involvement was philanthropic at heart, and meant to protect people from being bullied by unscrupulous media outlets. If anything, the lawsuit was meant to deter Gawker from intentionally releasing damaging content that lacked legitimate news value. Gawker founder Nick Denton, who was named personally in Bollea’s claim, made a statement about Thiel’s involvement in the case: “Just because Peter Thiel is a Silicon Valley Billionaire, his opinion does not trump our millions of readers who know us for routinely driving big news stories.” Also in 2016, a jury awarded Bollea compensatory damages of $115 million, plus punitive damages of $25 million—finding Gawker liable. A few months later, Gawker filed Chapter 11 bankruptcy, and began looking for a buyer. Several media outlets owned by Gawker were sold. By November 2016, Gawker and Bollea reached a settlement of $31 million. Today, Gawker’s flagship gossip site is still active. Gawker media sold off several of its prominent sites including Gizmodo, Jezebel, Deadspin, and io9. The LF Connection The case itself was of particular interest in and around the Litigation Finance community. Opponents of third-party legal funding asserted that Thiel’s actions in the case laid out an effective blueprint for the very wealthy to bankroll frivolous, but eye-catching cases. Billionaires could, some posited, use their wealth and legal connections to target specific companies, forcing them into bankruptcy. This speculation took place alongside the typical accusations that third-party litigation funding could clog court dockets with meritless actions meant to be quick paydays for funders and their clients. For example, Peter Sheer, a First Amendment expert, suggested that Thiel and others might abuse the power of third-party legal funding to intimidate media outlets. According to Sheer: “Winning is the ultimate chilling effect, but if you can’t win the case, you at least want the editors to think twice before writing another critical story about you.” To the keen-eyed observer though, it’s clear that Peter Thiel neither incited this case, nor had any real control over its outcome. Bollea initiated the case before Thiel’s involvement. At the time the case was decided, the jury was unaware that Bollea had a benefactor. And since the jury ruled in favor of Bollea, not Gawker, it’s clear that the case had merit. Thiel was always adamant that funding Bollea’s case (to the tune of $10 million) was about deterrence, not revenge. He explains that he wanted to “fight back” against Gawker’s practice of damaging reputations and bullying those with no means to pursue a claim to conclusion. As Thiel explains, “…even someone like Terry Bollea, who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone.” While one could view Thiel’s actions as being contradictory to the principles of free speech—he disagrees. In fact, Thiel has donated to free speech defenders like the Committee to Protect Journalists. Thiel maintains that there is a profound difference between journalism in the public interest, and the type of media Gawker traffics in. That’s why he decided to take action. Thiel told the New York Times, “It’s less about revenge and more about specific deterrence. I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.” Now, six years after the case has concluded—what have we learned? We haven’t seen a rash of billionaires funding cases, frivolous or not, with the intention of bringing down specific companies. That’s not to say billionaires aren’t financing claims the way Thiel did, only that they aren’t doing so publicly. Unlike traditional litigation funders, Thiel did not stand to make any money from Bollea’s lawsuit. Technically, Thiel should still be considered the litigation funder, though his term sheet wouldn’t be one most funders would want to imitate. The Gawker case has not led to a slew of frivolous, funded claim. Among other reasons, it simply doesn’t make financial sense to invest in a case lacking in merit. Bollea’s accusations against Gawker were affirmed by the jury, which resulted in a large award. So this claim was meritorious, even if Thiel’s motivation for funding the claim were not ROI-based. Media outlets are not cowering en masse over fears of punitive lawsuits from billionaires. That was much ado about nothing. Holding media outlets accountable for what they print (and occasionally, their motivations for doing so) is a vital and essential part of the free press. Free speech is not freedom to print anything—even something as personal as a sex tape—merely as an attention-getting device. Final Takeaways Can a lawsuit fall under the purview of Free Speech? Thiel believes so, and many others agree. This case addressed questions of privacy, free speech, and litigation funding. The end results demonstrated that we are all entitled to some element of privacy—even the celebrities among us. The Gawker case also affirmed that litigation funding still serves the interests of justice by enhancing the ability of claimants to bring lawsuits when they are wronged. The takeaway here should be that Peter Thiel afforded Hulk Hogan access to justice. Of course, when a billionaire backs a professional wrestler against a media company, sometimes the moral of the story can get lost beneath the headlines." https://litigationfinancejournal.com/the-6th-anniversary-of-the-peter-thiel… .

1 0

Entrapment
by Gunnar Larson 02 Feb '23

02 Feb '23

Hello: I am under entrapment, now for several hours. I have asked the agents to stop. Apparently, they refuse decorum. Obstruction of justice is a crime. Tampering is a crime. Intimidation is a crime. Gunnar Larson

1 0

28 U.S. Code § 1658 - Time limitations on the commencement of civil actions arising under Acts of Congress | U.S. Code | US Law | LII / Legal Information Institute
by Gunnar Larson 02 Feb '23

02 Feb '23

https://www.law.cornell.edu/uscode/text/28/1658 (a)Except as otherwise provided by law, a civil action arising under an Act of Congress enacted after the date of the enactment of this section may not be commenced later than 4 years after the cause of action accrues. (b)Notwithstanding subsection (a), a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws, as defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), may be brought not later than the earlier of— (1)2 years after the discovery of the facts constituting the violation; or (2)5 years after such violation. (Added Pub. L. 101–650, title III, § 313(a), Dec. 1, 1990, 104 Stat. 5114; amended Pub. L. 107–204, title VIII, § 804(a), July 30, 2002, 116 Stat. 801.)

1 0

Re: [EXT]Re: Confirmation of Zoom Orientation
by Gunnar Larson 02 Feb '23

02 Feb '23

Obstruction of justice is a crime. On Wed, Feb 1, 2023, 9:08 AM Denae Knight <DKnight(a)nadap.org> wrote: > No, we cannot keep pushing orientation back. If you are not able to make > orientation this week, I will need to remove you from our list. You can > reach back out when you are ready to move forward with the process without > rescheduling appointments. > > > > > > *Denae Knight* > Career Services Coordinator > NADAP > 1825 Park Avenue, 5th Floor > New York, NY 10035 > T: (646) 809-4865 > F: (646) 791-4959 > DKnight(a)nadap.org > <https://www.facebook.com/NADAPInc> <https://twitter.com/NADAP_Inc> > <https://www.linkedin.com/company/nadap> > <https://www.youtube.com/user/NADAP1971> > <https://www.pinterest.com/user_name_here> > <https://www.instagram.com/nadap_inc/>. > www.nadap.org > > > > Confidentiality Note: This e-mail, and any attachment to it, contains > privileged and confidential information intended only for the use of the > individual(s) or entity named on the e-mail. If the reader of this e-mail > is not the intended recipient, or the employee or agent responsible for > delivering it to the intended recipient, you are hereby notified that > reading it is strictly prohibited. If you have received this e-mail in > error, please immediately return it to the sender and delete it from your > system. > > *From:* Gunnar Larson <g(a)xny.io> > *Sent:* Wednesday, February 1, 2023 8:49 AM > *To:* Denae Knight <DKnight(a)nadap.org> > *Subject:* [EXT]Re: Confirmation of Zoom Orientation > > > > *CAUTION:* This email originated from outside of NADAP's network. Please > use caution before clicking any links or attachments. Do not follow a link > that asks you to sign in with your credentials. > > Denae: > > > > Can I please schedule our conversation for next Monday at 2:00pm? > > > > Hope you have a great day. > > > > Thank you, > > > > Gunnar > > > > > > On Mon, Jan 30, 2023, 12:21 PM Gunnar Larson <g(a)xny.io> wrote: > > Denae: > > > > Would it be possible to schedule this meeting for tomorrow or Wednesday at > the same time? > > > > Thank you, > > > > Gunnar > > > > On Fri, Jan 27, 2023, 10:24 AM Gunnar Larson <g(a)xny.io> wrote: > > Denae: > > > > Thank you for the call today. > > > > My CV is attached. > > > > Have a great day. > > > > Thank you, > > > > Gunnar > > > > Gunnar Larson > > 646-454-9107 > > > > On Fri, Jan 27, 2023, 10:21 AM Denae Knight <DKnight(a)nadap.org> wrote: > > Hi Gunner, > > > > As discussed, I have registered you for our zoom orientation which will > take place next Monday (1/30) at 2pm. You should have received a separate > email with the zoom link. Here is the zoom link if you have not received > the registration email: > > > > > https://us06web.zoom.us/w/84261393031?tk=Z3XDgLOJ-eEPyoBM4q4ZfqcLP1auPGGLjZ… > <https://urldefense.proofpoint.com/v2/url?u=https-3A__us06web.zoom.us_w_8426…> > > > > In the meantime, if you have an existing resume, please forward it along > with any diplomas/certifications. If you have any questions or concerns, > please don’t hesitate to reach out at the phone number below. You can also > text me at 516-995-1745. > > > > Regards, > > > > > > > > [image: Image removed by sender.] > > *Denae Knight* > Career Services Coordinator > NADAP > 1825 Park Avenue, 5th Floor > New York, NY 10035 > T: (646) 809-4865 > F: (646) 791-4959 > DKnight(a)nadap.org > [image: Image removed by sender.] > <https://urldefense.proofpoint.com/v2/url?u=https-3A__www.facebook.com_NADAP…> > [image: Image removed by sender.] > <https://urldefense.proofpoint.com/v2/url?u=https-3A__twitter.com_NADAP-5FIn…> > [image: Image removed by sender.] > <https://urldefense.proofpoint.com/v2/url?u=https-3A__www.linkedin.com_compa…> > [image: Image removed by sender.] > <https://urldefense.proofpoint.com/v2/url?u=https-3A__www.youtube.com_user_N…> > [image: Image removed by sender.] > <https://urldefense.proofpoint.com/v2/url?u=https-3A__www.instagram.com_nada…> > . > www.nadap.org > <https://urldefense.proofpoint.com/v2/url?u=http-3A__www.nadap.org&d=DwQFaQ&…> > > > > > Confidentiality Note: This e-mail, and any attachment to it, contains > privileged and confidential information intended only for the use of the > individual(s) or entity named on the e-mail. If the reader of this e-mail > is not the intended recipient, or the employee or agent responsible for > delivering it to the intended recipient, you are hereby notified that > reading it is strictly prohibited. If you have received this e-mail in > error, please immediately return it to the sender and delete it from your > system. > >

2 1

CNN Report on Personal Injury Advertising Trends - Litigation Finance Journal
by Gunnar Larson 02 Feb '23

02 Feb '23

Check out my new article: https://litigationfinancejournal.com/cnn-report-on-personal-injury-advertis… In 1977, the United States Supreme Court ruled that legal advertisements are protected by the first amendment. The court highlighted that restrictions on legal marketing hampered access to justice “particularly for the not-quite-poor and the unknowledgeable.” The 1980s spawned a renaissance in attorney advertising, and today, the market for legal advertising tops well over $1.2B a year in the United States. CNN Business reports ( https://www.cnn.com/2022/12/25/business/personal-injury-lawyers-advertising…) that many personal injury firms are seeking to advertise to the public, in a bid to attract attention with clever TV commercials and newspaper promotions. Direct response methods are even engaged to target potential clients who are currently in the hospital recovering from injury. Hedge funds and savvy litigation investment networks invest vast sums of capital to attract business in the personal injury market, according to CNN. The U.S. Chamber’s Institute for Legal Reform (a longstanding opponent of the litigation funding industry) claims that aggressive attorney advertising is problematic and can increase the number of frivolous lawsuits. In contrast, CNN reports that the overall amount of claims filed in the United States is declining, partly due to stricter state laws to curb social inflation, and also due to the increasing cost of bringing cases to court. That latter point is exactly why consumer legal funding exists in the first place.

1 0

The perfect privacy blockchain has not yet been built
by professor rat 01 Feb '23

01 Feb '23

"How Nym fights surveillance and control with blockchain technology" - BeinCrypto (German) “There are already some blockchains that offer privacy features…But they can't do smart contract execution, so they purposefully have quite a limited feature set. I think that offering privacy features for smart contract execution, which Nym is just about to get on mainnet, is the next obvious step…We think it's going to change the way people think about privacy and blockchains. Looking to the future, there's a huge protocol design space for privacy features to do things like protecting transaction gossip, stop MEV extraction, and allow people to control their privacy levels. The perfect privacy blockchain has not yet been built.” FROM NYM newsletter - caveat emptor

1 0

Anarchism to the Max
by professor rat 01 Feb '23

01 Feb '23

WOLFIE "When I first read The Ego and Its Own, I recognized that there was a great deal of humor, sarcasm, and satire throughout the book. I never understood how anyone could call Stirner “humorless”—yet certain critics (particularly those who wanted to present him as a precursor of the political right or some other sort of “supreme evil” in their eyes) accused him of precisely this. After translating Stirner’s Critics and “The Philosophical Reactionaries,” I realized the extent of his mocking, sarcastic, and, at times, bawdy humor and the breadth of his wordplay. My play with these translations and talks with Jason McQuinn {1} clarified some of the flaws I had recognized in the existing English translation of Der Einzige und sein Eigentum, and the pleasure I find in the activity of translating moved me to take up the project... you could do what Stirner did and see the humor in the ultimate absurdity, recognizing that this lack of universal meaning and purpose is what gives you and I the capacity to willfully create our lives for ourselves. Stirner willfully grasped his own self-creative power and took aim at all that was considered sacred with the intention of demolishing it. He knew the best weapon for demolishing the sacred is mocking laughter. Instead of being a wise man, Stirner chose to be a wise guy, and if you don’t get the joke, the jokes on you... Stirner’s ideas and words have quite a bit to offer, but even more, his method provides a most useful and enjoyable weapon: merciless and mirthful mockery, the sarcastic use of his opponents’ methods to twist their own ideas back against them, the cruel and joyful laughter of one who sees past the delusions that keep others in chains. Stirner combined the small jokes of wordplay, (mostly) subtle lewdness, and sarcasm with an overarching joke that undermined the edifices of philosophy, religion, politics and all systems of overarching thought to demolish the foundations of the sacred. But this is a battle that each one of us has to fight for her or himself. Stirner found enjoyment in writing this. His grin stretches across the pages and reminds all of us who rebel and create for ourselves that this is all one great, wild, joyful joke played on every “higher value,” a book intended to pull the rug out from under everything that anyone holds sacred. . . " LANDSREICHER Cheap plastic-toy imitation Nietzsche fellators GO FUCK YOURSELF

1 0

United States v. Samuel Bankman-Fried, 22 Cr. 673 (LAK)
by Gunnar Larson 01 Feb '23

01 Feb '23

https://wallstreetonparade.com/wp-content/uploads/2023/02/January-30-2023-L… BY ECF Honorable Lewis A. Kaplan United States District Judge Daniel Patrick Moynihan United States Courthouse 500 Pearl Street New York, NY 10007-1312 Re: United States v. Samuel Bankman-Fried, 22 Cr. 673 (LAK) Dear Judge Kaplan: The Government writes in reply to the defendant’s opposition to the Government’s motion to impose two new conditions of pretrial release, and its request to remove the existing condition prohibiting the defendant from accessing or transferring any FTX or Alameda assets or cryptocurrency. For the reasons below, and those in the Government’s motion filed on January 27, 2023 (see Dkt. 50), the Court should impose the Government’s proposed conditions of pretrial release and maintain the already-imposed conditions. 1. The Proposed No-Contact Condition Is Warranted The first proposed condition—that 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 or as approved by the Government—is necessary to prevent witness tampering and obstruction of justice. See 18 U.S.C. § 3142(c)(1)(B)(iv) & (v) (providing that a court may impose conditions of bail that restrict personal association and avoid contact with victims and potential witnesses). The defendant’s messages to Witness-1, attached as Exhibit 1, illustrate why such a condition is appropriate. The defense argues that these messages were merely an “innocuous attempt to offer assistance in FTX’s bankruptcy process,” similar to the defendant’s earlier outreach to John Ray, the CEO of the FTX Debtor entities. Dkt. 51 (“Def. Letter”) at 5; see also Ex. 2 (January 2, 2023 email from the defendant to John Ray). Putting aside that the defendant is trying to participate in FTX asset recovery despite being charged with crimes related to the misuse of FTX customer assets that precipitated FTX’s bankruptcy, the defendant’s messages to Witness- 1 cannot bear his interpretation The differences between the defendant’s contacts with Witness-1 and John Ray are instructive. First, Witness-1, unlike John Ray, is a witness to the charged crimes and not the steward of FTX’s bankruptcy. Second, the messages to Witness-1 are not of the same character as those to John Ray. In reaching out to John Ray, the defendant copied his attorneys and was explicit that he wanted to assist with asset recovery. The defendant’s messages to Witness-1 omit both Witness-1’s and the defendant’s attorneys and are comparatively oblique, making no mention of asset recovery, and referring instead to a “constructive relationship,” “us[ing] each other as resources,” and “vet[ting] things with each other.” Ex. 1. This goes beyond offering “assistance to FTX ‘as a resource.’” Def. Letter at 2. The defendant refers to “resources” plural; he not only offered himself as a resource, but also asked Witness-1 to be a resource for him in return. Asking a potential witness to be a resource to him, and to “vet things” with him—without any clarification of a supposedly benign intent—shows an effort to improperly influence Witness-1. Tellingly, the defense proffers no permissible or innocuous means by which Witness-1 could be a “resource” to the defendant. Although, as the defense points out, Witness-1 did not respond to the message, Witness-1’s attorney promptly alerted the Government to the defendant’s concerning overture. Regardless, a defendant can engage in improper witness contacts even without explicitly seeking to shape the witness’s testimony. Improper tampering with a witness can be achieved by both “direct and indirect means,” and whether an “overt threat or implied intimidation,” the “taint” of such “improper contacts . . . cannot easily be overcome.” United States v. Grisanti, No. 91 Cr. 299A, 1992 WL 265932, at *6 (W.D.N.Y. 1992). Because “[w]itness tampering by its very nature strikes at the fairness and perverts the integrity of the judicial process,” id., the bail statute expressly recognizes that a condition that prohibits “all contact with an alleged victim of the crime and with a potential witness who may testify concerning the offense,” is among the conditions that may be necessary to protect the safety of the community, 18 U.S.C. § 3142(c)(1)(B)(v). Here, the defendant’s position of authority with respect to his former employees, combined with his recent outreach to a former employee about the case, raises a sufficient specter of witness tampering to justify the proposed condition. The defendant asserts that “many” of the former employees who would fall under the proposed bail condition are the defendant’s friends and an “important source of personal support.” Def. Letter at 6. While that may be true, it is also true that many of the defendant’s former employees are not only potential witnesses, but also his victims. The defendant perpetrated his scheme with the assistance of a few high-level executives, but many of his employees were in the dark until FTX’s collapse, and themselves lost money as a result of the defendant’s crimes. These employees had assets on FTX.com, including compensation the defendant had paid in the form of FTT, FTX.com’s cryptocurrency token that collapsed in value in November 2022 as the defendant’s misconduct was exposed. The defense notes that FTX and Alameda had approximately 350 employees. Def. Letter at 6. That merely highlights the Government’s informational disadvantage; while the Government has conducted dozens of interviews, it has not communicated with every former FTX and Alameda employee, let alone defined the complete universe of former employees with information relevant to the charged crimes. The defendant, on the other hand, can more readily identify for the Government or the Court the close friends whose support he considers critical to his mental health and wellbeing. See Def. Letter at 5. The Government does not seek to deprive the defendant of personal support—it acquiesced in the defendant’s request to live with his parents in California and has already indicated no objection to the defendant communicating with his therapist and several friends (and former employees) identified by the defense as continued close friends of the defendant. In an email on January 27, 2023, at 11:42 a.m., the Government thanked defense counsel for their “engagement” on the proposed bail condition, informed defense counsel of the conditions it intended to seek from the Court, and noted the Government’s view that it is “more administrable to approve proposed contacts than to give you a potential witness list, particularly because our investigation is ongoing and we continue to identify former/current employees with relevant information.” Notably, while the defendant’s proposed bail modification includes a category of witnesses whom the defendant would be prohibited from contacting, even in the presence of his attorneys, the Government seeks no such restriction. Under the Government’s proposal, the defendant would remain free to contact and communicate with potential witnesses, as long as his attorneys are present, thereby preserving his constitutional right to participate in and prepare his defense. The defendant’s claims that that the proposed condition would impinge upon his First Amendment right of association and ability to participate in his defense are therefore without merit. See Def. Letter at 5. As the cases relied upon by the defendant themselves makes clear, a district court may impose a bail condition that restricts a defendant’s right to associate upon a finding that such a condition is necessary. See United States v. Lillemoe, No. 15 Cr. 25, 2015 WL 9694385, at *2 (D. Conn. May 28, 2015); United States v. Arzberger, 592 F. Supp. 2d 590, 603-04 (S.D.N.Y. 2008). Indeed, Section 3142 specifically contemplates that judges may make such a finding. 18 U.S.C. § 3142(c)(1)(B)(iv) (conditions of release may include “that condition that the person . . . abide by specified restrictions on personal associations”). The defendant makes no persuasive showing that the proposed condition would impede participation in his defense. If anything, the proposed condition ensures that to the extent the defendant participates directly in his own defense, he does so consistent with the rules that require contact through a represented person’s attorney and without improperly influencing or intimidating witnesses. The defense cites several cases that included a bail condition similar to that proposed by the defense. Notably, those cases too imposed restrictions on a defendant’s association with others. But to the extent that the defendant advances those cases to support his proposed restrictions as opposed to the Government’s, those cases are readily distinguishable. Ruiz, for example, involved charges against a drug courier, and the government needed to identify the “witnesses and alleged co-conspirators” to which the no-contact restriction applied because there was not an easily identifiable category of witnesses, such as employees, investors, or victims to use in the restriction. United States v. Ruiz, 21 Cr. 596 (LAK) (S.D.N.Y. Jan. 29, 2021). Similarly, Ospina involved charges against an individual who helped to move proceeds of an elder fraud scheme, and it was necessary for the government to identify “witnesses and victims” to which the no-contact restriction applied because the defendant did not know the identities of all the witnesses and victims. United States v. Ospina, 20 Cr. 102 (VEC) (S.D.N.Y. Jan. 10, 2020). Courts in this District have routinely imposed a condition like that proposed by the Government here in cases where the defendant perpetrated a fraud in a corporate setting and the defendant’s former employees, co-workers, or investors were among the potential witnesses or victims. See, e.g., United States v. Chastain, 22 Cr. 305 (JMF) (S.D.N.Y. June 1, 2022).(“Defendant to have no contact with present or former employees of OpenSea except in presence of counsel”); United States v. Milton, 21 Cr. 478 (ER) (S.D.N.Y. July 29, 2021) (“Defendant is not to have contact with any investors except individuals the defendant has an independent relationship with”); United States v. Wynder, 20 Cr. 470 (PKC) (S.D.N.Y. July 13, 2020) (“No contact with past or present employees, agents, board members of LEEBA or LEEBA funds, except in presence of counsel”); United States v. Petit and Taylor, 19 Cr. 850 (JSR) (S.D.N.Y. Dec. 4, 2019) (“absent the advance written approval of the Government, deft shall have no contact (direct or indirect) outside of the presence of counsel, with (a) current or former Mimedx employees (b) current or former employees/representatives of Mimedx distributors or auditors; (c) current or former Mimedx counsel; except for inadvertent/nonsubstantive social contact”); United States v. Cole, 19 Cr. 869 (ER) (S.D.N.Y. Dec. 5, 2019) (defendant “to have no contact, direct or indirect, outside of the presence of counsel, with current or former employees of Iconix Brand Group, GBG, or BDO, except for defendant’s family members”); United States v. Wong, 18 Cr. 737 (JGK) (S.D.N.Y. May 5, 2018) (“No Contact with Current or Former MCU Employees or Board Members”); United States v. Abghari, 14 Cr. 518 (JFK) (S.D.N.Y. Aug. 7, 2014) (defendant “shall have no contact with any current or former employees or representative of Vortex Financial Management, d/b/a Professional Legal Network, Attorneys Legal Network, Attorneys Alliance Union, Legal Exchange Group, and Professional Marketing Group; The Rory M. Alarcon Law Firm, d/b/a RMA Legal Network, National Legal Associates, and R.A. Legal Group and the Brian Butler Law Firm”). The proposed no-contact condition is similarly justified here. 2. The Proposed Prohibition on Using Encrypted and Ephemeral Messaging Is Warranted In opposing the Government’s second proposed condition—that the defendant not use any encrypted or ephemeral call or messaging application—the defense asks the Court to disregard evidence that the defendant used Slack and Signal, and their autodelete functions, to obstruct detection of his underlying crimes, claiming that this is “irrelevant to the bail analysis.” Def. Letter at 6. But this evidence is precisely why the Government’s concerns about the defendant’s continued use of Signal are not “unfounded,” as the defense insists. Def. Letter at 6. The Court is expressly directed when determining bail conditions to consider the “nature and circumstances of the offense charged,” 18 U.S.C. § 1342(g)(1), and here that includes the defendant’s deliberate destruction of inculpatory communications with his coconspirators using Signal and Slack’s autodelete function. While the specific messages to Witness-1 were not set to autodelete at the time they were sent, Signal allows either party to unilaterally delete existing messages. The defendant’s continued use of Signal to communicate with a former employee about the case, combined with his previous use of Signal to obstruct justice, warrants the proposed condition. Moreover, the proposed condition does not burden the defendant’s ability to communicate or to prepare his defense. The defense identifies no compelling need for the defendant to use encrypted and ephemeral messaging applications, as opposed to standard forms of communication, such as unencrypted text messages, emails, and phone calls.3. The Existing Prohibition on Accessing or Transferring any FTX or Alameda Assets Remains Warranted In asking the Court to remove the existing bail condition that prohibits the defendant from accessing or transferring any FTX or Alameda assets, the defense relies on a mistaken premise. Contrary to the defense’s assertion, this condition does not solely depend on whether the defendant is responsible for the access and transfer of Alameda funds that occurred shortly before the initial conference (a matter that the Government continues to investigate). Instead, that incident highlighted that despite the Government’s property seizures and the extensive assets already secured by the bankruptcy estate, there remain FTX and Alameda cryptocurrency assets that are vulnerable to exploitation and in need of protection from the defendant. Given the “nature and circumstances of the offense charged,” 18 U.S.C. § 1342(g)(1), the existing condition is justified because the defendant is charged with defrauding customers of FTX, investors in FTX, and Alameda’s lenders—meaning that the very assets that the defendant seeks to access are the potential proceeds of his crimes. The Government continues to identify and trace assets that are potentially forfeitable in this case but that remain at risk of diversion. Because FTX’s and Alameda’s remaining assets may include stolen customer funds, fraud proceeds, or assets that are otherwise recoverable by FTX’s creditors, there is no justifiable basis for the defendant to access these assets, and he identifies none. Moreover, although the Government has not identified the source of the hack that occurred shortly before the initial conference, the defendant’s misuse of FTX and Alameda assets during November 2022 independently justifies the bail condition. As FTX struggled to meet customer withdrawal requests in early November, Bankman-Fried approved halting customer withdrawals from the exchange. Shortly thereafter, however, he reopened withdrawals only for customers in the Bahamas. In an email to Ryan Pinder, Attorney General of the Bahamas on November 10, 2022, Bankman-Fried wrote in part, “We are deeply grateful for what The Bahamas has done for us, and deeply committed to it. We are also deeply sorry about this mess. As part of this: we have segregated funds for all Bahamian customers on FTX. And we would be more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole. It’s your call whether you want us to do this--but we are more than happy to and would consider it the very least of our duty to the country, and could open it up immediately if you reply saying you want us to. If we don’t hear back from you, we are going to go ahead and do it tomorrow.” Opening withdrawals exclusively for Bahamians resulted in millions of dollars being withdrawn from the exchange, while other customers of FTX had no ability to access withdrawals. In addition, and as noted at the initial conference, after FTX declared bankruptcy, the defendant worked with foreign regulators to transfer FTX assets to foreign regulators, when he knew that FTX’s lawyers were seeking to secure those very assets for the U.S. bankruptcy, and he told Gary Wang—FTX’s Chief Technology Officer who has pleaded guilty to a cooperation agreement with the Government—in substance and in part, that he wanted to stall with the U.S. bankruptcy in order to assist the foreign regulators, whom he thought would be more lenient with him and who might permit him to regain control of FTX.1 Finally, in December, the defendant moved to take control of approximately $500 million of Robinhood shares that were purchased using misappropriated FTX customer funds by a special purpose entity owned primarily by the defendant. The Government has since seized the shares after demonstrating probable cause to believe that they are the proceeds of wire fraud and are property involved in money laundering. Since the Government’s seizure, the defendant has claimed that he would direct the majority of these funds toward making customers whole, but the original circumstances of the purchase of these shares, through a foreign special purpose vehicle with no public connection to FTX or Alameda, further indicate the steps the defendant has taken to obscure his criminal misuse of FTX customer property. For these reasons, the defendant’s request to remove this bail condition should be denied. Respectfully submitted, DAMIAN WILLIAMS United States Attorney by: /s/ Danielle R. Sassoon Nicolas Roos Danielle R. Sassoon Samuel Raymond Thane Rehn Andrew Rohrbach Assistant United States Attorneys (212) 637-1115

1 0