TLDR
- Judges expressed skepticism about Sam Bankman-Fried’s claim that FTX could have repaid its customers.
- Circuit Judge Barrington Parker Jr. criticized the defense for focusing on the trial judge instead of the main arguments.
- Former prosecutor Samson Enzer said the appeal faced tough questioning from the appellate panel.
- Sam Bankman-Fried’s lawyer argued that key evidence about legal advice was wrongly excluded during the trial.
- Prosecutors said that $8 billion in FTX customer funds were misused by Alameda Research for investments and donations.
Judges from the U.S. Court of Appeals for the Second Circuit questioned Sam Bankman-Fried’s argument that FTX could have repaid customers. His lawyer, Alexandra Shapiro, argued that the exchange would have restored funds with more time, but the panel expressed doubt. The appeal hearing followed his September 2024 request for a new trial after his fraud conviction.
Judges Show Skepticism Toward Defense Claims
The hearing revealed the judges’ doubts about Sam Bankman-Fried’s assertions regarding FTX’s solvency. Circuit Judge Barrington Parker Jr. said, “It almost seems like you’re spending more ink on Judge Kaplan than on the merits.” His comment reflected concern that the appeal focused more on the trial judge than the underlying issues.
Former federal prosecutor Samson Enzer said the defense made “a valiant effort” but faced skepticism from the panel. Enzer, now at Cahill Gordon & Reindel LLP, noted that the questions highlighted weaknesses in the appeal. He spoke to The Block after attending the session in New York.
Sam Bankman-Fried’s legal team maintained that FTX customers would have been repaid if liquidation had continued. However, the judges questioned whether the claim addressed the core issue of fraud. Their tone suggested the panel viewed the appeal with caution.
Defense Highlights Excluded Evidence and Counsel Advice
Sam Bankman-Fried’s lawyers argued that the trial court wrongly restricted key evidence supporting his “presence of counsel” defense. They said Judge Lewis Kaplan limited testimony showing he acted under the advice of attorneys. The defense claimed this evidence would have shown good faith in his decisions.
During the September 2024 appeal filing, the legal team criticized Kaplan’s handling of pretrial rulings. They stated that Bankman-Fried should have been allowed to present documentation about FTX’s internal legal guidance. Shapiro emphasized that this exclusion weakened his right to a fair trial.
The judges questioned whether this argument outweighed the substantial fraud evidence. Prosecutors insisted the restricted evidence would not change the verdict. They reminded the court that the jury found proof beyond reasonable doubt.
Prosecutors Reassert FTX Fraud and Misused Funds
Prosecutors told the panel that Sam Bankman-Fried moved $8 billion in customer funds to Alameda Research. They said the money financed investments and political donations unrelated to exchange operations. They argued customers’ “money was not being held safely” on FTX.
They also said Bankman-Fried concealed the true financial state of his companies. Evidence during the 2023 trial showed he used customer deposits to support Alameda’s trading positions. The panel reviewed these points closely during the appeal session.
Sam Bankman-Fried was convicted in November 2023 on seven counts of fraud and conspiracy. The New York jury found he defrauded customers, lenders, and investors. Judge Kaplan later sentenced him to 25 years in prison.
Prosecutors had previously accused him of disguising political contributions using “wealthy co-conspirators.” Though that charge was dropped, the evidence supported the broader fraud case. The appeal hearing revisited these issues to determine whether a new trial was justified.
Court Decision Expected in Coming Months
The judges will issue their opinion in the coming months, concluding Sam Bankman-Fried’s latest legal challenge. The ruling will decide whether his request for a new trial will proceed. Until then, he remains in federal custody serving his sentence.
Observers expect the Second Circuit to release its decision early next year. The outcome will determine if his fraud convictions stand or return to trial. The appeal marks another phase in the long-running FTX legal saga involving Sam Bankman-Fried.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
