Appeals Court Seems Unmoved by Sam Bankman-Frieds Claims of an Unfair Trial

NEW YORK — The possibility of a new trial for former FTX CEO Sam Bankman-Fried appears to be fading. This was evident during a recent appellate court hearing in Manhattan, where judges rigorously questioned his claims of an unfair trial.

Bankman-Fried's Lawyer Argues the Trial Was Unfair

Bankman-Fried’s attorney, Alexandra Shapiro, presented arguments asserting that the high-profile trial was inherently unfair. She claimed that District Judge Lewis Kaplan had prevented her client from sharing his perspective with the jury, specifically by not allowing him to present what she described as "objective evidence" that the crypto exchange was solvent when it declared bankruptcy in November 2022.

Shapiro’s argument hinges on the assertion that the majority of FTX’s creditors were compensated during the ongoing bankruptcy process, which involved selling off illiquid assets like real estate and venture capital investments. She insisted that this indicated no actual theft had occurred.

Court Questions Evidence Supporting Claims of FTX Solvency

During Shapiro’s presentation, the appellate judges frequently interrupted to seek clarification on her points. Judge Eunice Lee expressed skepticism about the notion of objective corroboration, questioning how the post-bankruptcy recovery of funds could support Bankman-Fried’s claims. She pointed out that the evidence suggested that, following the bankruptcy, more money was recovered, which seemed to contradict Bankman-Fried’s argument.

In response to Shapiro's assertion that valuable assets existed within the FTX estate at the time of bankruptcy, Judge Maria Araújo Kahn highlighted that the issue at hand was not solvency but liquidity. The government’s case focused on whether Bankman-Fried had misrepresented the safety of customer funds, suggesting that customers could not access their money when they needed it.

Debate Over Lawyers' Role in Bankman-Fried's Defense

Shapiro also attempted to argue that the trial was unfair because Bankman-Fried was not permitted to adequately discuss how he was influenced by FTX’s legal team. While she stated that he was not relying on an advice-of-counsel defense, she maintained that he should have been allowed to present evidence regarding the involvement of lawyers in his decision-making process.

Judge Barrington Parker challenged Shapiro, asking how the involvement of attorneys in drafting documents was relevant to the charges against Bankman-Fried. Shapiro contended that establishing the lawyers' role in creating the entities involved in handling customer deposits was crucial to showing Bankman-Fried’s good faith.

However, judges Lee and Parker pointed out that Bankman-Fried had opted not to pursue an advice-of-counsel defense, which limited the relevance of the arguments regarding his legal team’s involvement.

Prosecution Asserts Overwhelming Evidence Against Bankman-Fried

In response, Assistant U.S. Attorney Nathan Rehn, a lead prosecutor in Bankman-Fried’s original trial, argued that the jury had been presented with overwhelming evidence of fraud. He dismissed Bankman-Fried’s claims as lacking merit and asserted that the trial court’s decisions were appropriate given the context of the case.

Rehn emphasized that the core of the government’s argument was centered on the misappropriation of customer funds during the crisis that engulfed FTX in 2022, rather than on the ultimate recovery of those funds.

Judge Parker sought Rehn’s opinion on Shapiro’s allegations of bias from Judge Kaplan. Rehn denied any bias, stating that the defense’s arguments were largely unfounded. He concluded that even if there had been any errors in the trial proceedings, they would not have altered the outcome, given the substantial evidence against Bankman-Fried.

The appellate panel did not issue a ruling during this hearing, and decisions from such courts can take months to finalize.

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