Appeals Court Seems Unmoved by Sam Bankman-Fried’s Claims of an Unfair Trial

NEW YORK — Former FTX CEO Sam Bankman-Fried’s chances of getting a fresh trial seem to be dwindling, judging by the pointed questions of an appellate court during a hearing in Manhattan on Tuesday. Bankman-Fried’s lawyer Alexandra Shapiro argued that the trial was “fundamentally unfair” as District Judge Lewis Kaplan allegedly prevented her client from presenting his side of the story. Shapiro criticized the jury’s lack of access to 'objective evidence' that FTX was solvent at the time of its bankruptcy in November 2022.

Bankman-Fried’s case for a new trial hinges on a claim that FTX creditors were largely made whole during the bankruptcy process, supported by the sale of illiquid assets like real estate and venture capital investments. Shapiro emphasized these points, arguing they corroborated Bankman-Fried’s belief that FTX and Alameda Research were solvent. However, Circuit Judge Maria Araújo Kahn countered this defense, stating that the trial was not about solvency but rather misrepresented liquidity, where investors were misled about their ability to access their funds.

The appellate judges challenged Shapiro’s claims, with Circuit Judge Eunice Lee remarking on the lack of objective corroboration to support Bankman-Fried’s intent. Kahn referred to a recent Supreme Court ruling, Kousisis v. United States, which clarified that fraud does not require economic loss to qualify as fraud. This indicated skepticism towards the solvency defense being viable in this context.

Shapiro argued that the trial was also unfair because Bankman-Fried wasn’t allowed to explain how FTX’s lawyers had influenced his decisions, including those related to the formation of North Dimension entities. However, Circuit Judge Barrington Parker questioned the relevance of these legal actions to the fraud charges. Parker criticized the argument, stating, “If you had advanced the advice-of-counsel defense, a lot of this stuff... would have been much more probative.”

Assistant U.S. Attorney Nathan Rehn pushed back strongly against the appeal, citing “overwhelming evidence” of Bankman-Fried’s fraudulent actions. Rehn noted that misappropriation of customer funds, not the potential recovery of victim losses, was the core issue. He emphasized this by saying, “The government didn’t argue the money was gone forever, but that it was misappropriated at a critical time when customers sought withdrawals.”

Judge Kaplan's impartiality was also defended by Rehn, who dismissed Shapiro’s claims of bias as baseless. He argued that errors, if any, would be harmless given the weight of the evidence against Bankman-Fried. Rehn highlighted that three insiders testified they conspired with him to misappropriate funds, alongside abundant documentary evidence. He concluded, “The suggestion that any of these errors might have led to a different result... simply can't be sustained on this record.”

The appellate judges did not issue a ruling during the hearing. Appeals court decisions are often delayed and may take months to publish. For now, Bankman-Fried’s pursuit of a retrial remains uncertain.