By Luc Cohen

NEW YORK Sam Bankman-Fried, the indicted founder of the bankrupt FTX cryptocurrency exchange, is due back in a Manhattan courtroom on Friday, where he may learn if he will have to prepare for his October fraud trial from behind the jailhouse door.

Bankman-Fried, 31, has pleaded not guilty to stealing billions of dollars in FTX customer funds to plug losses at his hedge fund Alameda Research.

He has been largely confined to his parents' Palo Alto, California, home on $250 million bond since his December 2022 arrest, but the U.S. Attorney's Office in Manhattan now wants him jailed for witness tampering.

Prosecutors first made their surprise request to jail the former billionaire in a July 26 hearing, saying he "crossed a line" by sharing former romantic partner Caroline Ellison's personal writings with a New York Times reporter.

Ellison had been Alameda's chief executive, and is expected to testify against Bankman-Fried after pleading guilty to fraud and agreeing to cooperate with prosecutors.

Two other former members of Bankman-Fried's inner circle entered similar guilty pleas.

Bankman-Fried's lawyers have said prosecutors mischaracterized his intentions in sharing Ellison's writings, arguing he wanted to defend his reputation and had a right to speak to the press.

U.S. District Judge Lewis Kaplan will decide whether Bankman-Fried should remain free.

In the July 26 hearing, Kaplan restricted Bankman-Fried from speaking publicly about his case, and asked both sides to address whether jail was necessary.

The gag order has also drawn attention from news media including the Times, which in an Aug. 2 letter to the judge said the measure should be loosened to only restrict comments that could interfere with a fair trial.

A July 20 article in the newspaper contained excerpts from Ellison's personal Google documents prior to FTX's collapse.

She described being "unhappy and overwhelmed" with her job and feeling "hurt/rejected" from her personal breakup with Bankman-Fried.

(Reporting by Luc Cohen in New York; editing by Jonathan Oatis)