US prosecutors have confirmed that Sam Bankman-Fried (SBF), founder of collapsed crypto exchange platform FTX, has been accessing the internet with a VPN. This is prompting further tightening of his bail terms.
On February 13th, U.S. attorney Danielle Sassoon wrote a letter to Judge Lewis Kaplan, informing the defense counsel that the government had become aware of the defendant’s use of a VPN on two occasions in the past few weeks and expressing concerns about this matter.
Why is using a VPN a concern?
A virtual private network (VPN) is a must-have security tool in this era because of the increased cyber threats. It encrypts the internet connection and routes it through an intermediary server. Another fundamental privacy level is masking the IP address. When you connect to a server, the VPN will assign you a new IP address, making you completely anonymous online.
Besides encryption and changing the IP address, some VPN providers use RAM-only servers, which delete your session data once you log out. With all these security measures, even the government cannot see the sites you are accessing.
A VPN can be helpful in many ways. For example, it lets you bypass geo-restrictions and access any content you want worldwide. Also, you can avoid ISP throttling and improve your internet speed significantly.
However, the government is concerned that Bankman-fried may have used a VPN to access foreign crypto sites blocked in the US and even the dark web.
Bankman-Fried’s attorney Mark Cohen responded by saying that he had used the VPN to watch the Super Bowl and National Football league through international subscriptions on streaming websites. Also, the lawyers are willing to bargain for a reasonable bail condition and promised that Bankman-Fried wouldn’t use a VPN anymore.
Already the courts have restricted Bankman-Fried from contracting FTX employees with private messaging apps like Signal.
Recap On What Led To FTX Collapse?
FTX was valued at more than $32 billion at the epitome of its success. However, things started to go south after a publication claimed that Sam Bankman-Fried owned Alameda Research, which held a significant amount of FTT (FTX’s exchange token).
After the emergence of these allegations, Binance announced that it would dispose of its FTT, which made the token collapse. Unfortunately, this also led to panic withdrawals, creating a liquidity crisis and forcing the platform to freeze withdrawals. Later, more than 100 affiliated entities, including Alameda Research, filed for bankruptcy.
Due to the vast impact on the cryptocurrency markets, federal prosecutors described the FTX collapse as one of the biggest financial frauds in the US. It caused the price of Bitcoin and other cryptocurrencies to fall to their lowest in two years.
FTX is being investigated by the Commodity Futures Trading Commission (CFTC), Securities and Exchange Commission (SEC), and the US Department of Justice (DOJ). Moreover, the Securities Commission and Royal Bahamas Police are conducting investigations.
Lawsuits And Legal Involvements
The Bahamas authorities arrested Sam Bankman-Fried at the request of the US government (both countries share an extradition treaty). He was charged with eight criminal charges, including conspiracy to commit wire fraud, and was later extradited to the US.
Meanwhile, two of Bankman-Fried close associates pleaded guilty and agreed to cooperate with investigators. Gary Wang, FTX co-founder, and Carolyn Ellison, former Alameda Research CEO, pleaded guilty to several charges, including securities fraud, wire fraud, and commodities fraud.
However, Bankman-Fried pleaded not guilty to all the charges. He was released on a $250 million bond, subjected to electronic monitoring, and expected to live with his parents, who are professors at Stanford Law School in California.
Featured image from Pixabay and chart from TradingView.com