Judge Signals Jail Time if Bankman-Fried’s Internet Access Is Not Curbed

Judge Kaplan noted that the hearing was not called to consider bail revocation, “but it could get there, conceivably.”

A lawyer for Mr. Bankman-Fried, Mark S. Cohen, called the government’s proposal “draconian,” noting that it would prevent his client from doing research or viewing evidence. He also denied that Mr. Bankman-Fried had committed any wrongdoing or attempted to tamper with witnesses.

He also said his client would argue that using a VPN did not violate the terms of his release, because it is not an encrypted messaging service.

Mr. Bankman-Fried’s initial bail package required him to post a $250 million bond. But he didn’t actually have to pay any money: The bond was secured by his parents’ $4 million home as well as a much smaller amount of collateral posted by two colleagues of his parents — Larry Kramer, a former dean of Stanford’s law school, and Andreas Paepcke, a Stanford research scientist.

The identities of Mr. Kramer and Mr. Paepcke had been kept under wraps until Wednesday, when Judge Kaplan unsealed their names at the request of a dozen news organizations, including The New York Times.

In theory, Mr. Kramer, Mr. Paepcke and Mr. Bankman-Fried’s parents would be liable for the entire $250 million if Mr. Bankman-Fried fled.

At the close of Thursday’s hearing, Judge Kaplan asked both sides to pull together ideas for more restrictive conditions. He also suggested that he might bring on a technology consultant as a kind of legal clerk, at the defense’s expense.

Mr. Cohen said the defense lawyers were supportive of more restrictions.

“We understand from your comments today that there is no margin for error,” he said. Any more violations, he said, and “we will be in a very different proceeding.”

Matthew Goldstein contributed reporting.