FTX's Sam Bankman-Fried, DOJ tussle over his communications

Federal prosecutors are trying to prohibit FTX founder Sam Bankman-Fried from privately contacting current and former employees of the bankrupt cryptocurrency exchange to prevent potential witness tampering in a criminal case accusing him of bilking investors and customers.

The request, made in a letter filed late Friday by U.S. Justice Department lawyers, prompted an indignant response from Bankman-Fried's lawyer, who accused prosecutors of twisting the facts to cast the FTX founder in a sinister light ahead of his trial scheduled later this year.

The testy exchange prompted U.S. District Judge Lewis Kaplan in New York to issue a Saturday order that included admonishment for the opposing lawyers in the case to refrain from “pejorative characterizations" of each other's actions and motives.

Bankman-Fried, 30, has been under confinement at his parents' home in Palo Alto, California, since pleading not guilty earlier this month to charges against him. He is accused of diverting massive sums of FTX customer funds to buy property, donate to politicians and finance risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.

Federal prosecutors raised their concerns about Bankman-Fried's attempts to connect with potential witnesses in the case after discovering he sent an encrypted message over the Signal texting app on Jan. 15 to the general counsel of FTX US, according to their letter to Kaplan.

“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other," Bankman-Fried wrote to the FTX general counsel, dubbed “Witness 1," in the prosecutors' letter.

Federal prosecutors told Kaplan that Bankman-Fried's communications are a sign...