Former FTX CEO Sam Bankman-Fried files appeal and calls for a new trial

Former FTX CEO Sam Bankman-Fried has filed an appeal and called for a new trial.

A lawyer representing Bankman-Fried criticized New York District Judge Lewis Kaplan's handling of the case and said the former executive should not have been blocked from introducing certain evidence.

"He was presumed guilty — before he was even charged. He was presumed guilty by the media. He was presumed guilty by the FTX debtor estate and its lawyers," Bankman-Fried's lawyer said in the 102-page appeal. "He was presumed guilty by federal prosecutors eager for quick headlines. And he was presumed guilty by the judge who presided over his trial."

The appeal was filed in the U.S. Court of Appeals for the Second Circuit.

Bankman-Fried was found guilty in November by a jury in New York of all seven criminal counts of defrauding the customers, lenders and investors of FTX. Prosecutors say Bankman-Fried orchestrated "likely the largest fraud in the last decade," making comparisons to Ponzi scheme mastermind Bernie Madoff. He was later sentenced to 25 years in prison.

The jury "was only allowed to see half the picture," because the court ruled that whether Bankman-Fried intended to steal customer's money was not material, his lawyer, Alexandra Shapiro, argued in the appeal. The former CEO also would have testified that he had relied on lawyers' advice on certain business matters, but the court blocked him from testifying about that, Shapiro added.

'FTX was never insolvent'

The court blocked Bankman-Fried from introducing evidence that FTX and hedge fund Alameda were solvent, Shapiro said. During the trial, prosecutors alluded to both firms being insolvent.

"In making these arguments, the government parroted statements by the FTX Debtors, who had an interest in suggesting any harm suffered by customers was somehow Bankman-Fried’s fault, rather than the result of their mismanagement of estate assets," Shapiro said.

Prosecutors also said Bankman-Fried spent billions of dollars on luxury condos and political donations and that the money was gone.
"That narrative was false. As everyone now knows, FTX customers and Alameda creditors will be repaid by the bankruptcy estate," Shapiro said.

"Bankman-Fried had not lost or stolen all the money, and the investments he made were not risky or stupid. Many of them, like his $500 million investment in Anthropic and his investment in Solana, were prescient," Shapiro added. "Those investments, however, were illiquid, meaning they could not be immediately converted to cash to satisfy the November 2022 bank-run of customer withdrawals. FTX faced a liquidity crisis, not a solvency crisis."

Bankman-Fried ultimately should have been allowed to argue against prosecutors, Shapiro said.

"All this could have been proven at trial if the judge had allowed the defense evidence," according to the appeal. "The prejudice arising from the error can be summed up simply: The prosecution was allowed to present a case that was objectively false, and the defense was not permitted to rebut it."

The FTX estate has recovered up to $16.3 billion in assets. 

New case, new judge

Judge Kaplan outwardly showed he did not like Bankman-Fried during the trial, Shapiro argued in the appeal, accusing him of "putting a thumb on the scale to help the government."

The judge also "improperly prodded the jury" to figure out its verdict in one evening in part by offering free dinner and car service, Shapiro said.

"Over and over, Judge Kaplan expressed a firm belief in Bankman-Fried’s guilt," Shapiro said.