The air in a Manhattan courtroom was thick with high stakes this past Tuesday. Sam Bankman-Fried, the crypto figure whose empire crumbled so spectacularly, stood before an appellate court. His goal was simple, yet monumental: convince three judges he deserves a fresh trial.
- Sam Bankman-Fried is appealing his conviction, arguing his original trial was unfair and he couldn’t present crucial evidence.
- His defense claims FTX was solvent and that the prosecution focused on liquidity issues, not outright theft.
- The appellate judges questioned the relevance of the defense’s arguments regarding lawyers’ involvement and the concept of solvency versus liquidity.
From where I sat, it felt like watching a chess match where one side was constantly on the defensive. Bankman-Fried’s lawyer, Alexandra Shapiro, argued the original trial was “fundamentally unfair.” She claimed her client couldn’t tell his full story to the jury. He also couldn’t present what she called “objective evidence” that FTX, his crypto exchange, was actually solvent when it went under in November 2022.
Think about that for a moment. Solvent. That’s the core of Bankman-Fried’s long-standing argument. He suggests that since most FTX creditors are now getting their money back, thanks to asset sales during bankruptcy, there wasn’t any actual theft. It’s a bit like saying, “No harm, no foul,” even if the money was taken without permission in the first place.
The judges, however, seemed to have other ideas. They cut into Shapiro’s presentation with sharp questions. Circuit Judge Eunice Lee, for instance, wondered aloud about this “objective corroboration.” She pointed out that if money was made *after* the bankruptcy, that doesn’t necessarily prove solvency *at the time* of the collapse. It’s a crucial distinction, isn’t it?
Shapiro tried to clarify. She said there were “very valuable assets” in the FTX estate back then, supporting Bankman-Fried’s view that FTX and Alameda Research (his trading firm) were solvent. But another judge, Circuit Judge Maria Araújo Kahn, quickly pushed back. She highlighted a key point the prosecution made during the original trial.
“But Bankman-Fried’s misrepresentations were not to solvency, but liquidity,” Judge Kahn stated. She explained that the government’s argument, and what the jury believed, was that Bankman-Fried misled investors. He told them their money was safe, not being used in ways it shouldn’t. The issue wasn’t whether FTX had enough assets somewhere, but whether customers could get their money when they asked for it. That’s liquidity, a different beast entirely.
Judge Kahn even brought up a recent Supreme Court decision, Kousisis v. United States. This ruling found that fraud doesn’t always need to result in an economic loss to still be considered fraud. It’s a subtle but important legal point, suggesting that even if everyone eventually gets paid back, the initial act of misdirection can still be a crime.
The Lawyers’ Shadow
Shapiro also tried a different angle. She argued Bankman-Fried’s trial was unfair because he couldn’t sufficiently argue that FTX’s own lawyers led him astray. Now, this wasn’t a formal “advice-of-counsel” defense. That’s a specific legal strategy where a defendant claims they relied in good faith on legal advice and therefore aren’t liable.
Instead, Shapiro suggested Bankman-Fried should have been allowed to show the lawyers’ involvement as general evidence of his good faith. She pointed to the creation of entities like North Dimension. This subsidiary of Alameda Research controlled the bank accounts where FTX customers were told to wire their money. Shapiro argued that lawyers helped set up these structures, which should speak to Bankman-Fried’s intentions.
Circuit Judge Barrington Parker wasn’t buying it so easily. He interrupted, asking, “How is that relevant to any of the counts in the indictment?” He wanted to know how a lawyer drafting a certificate or an agreement proved anything about the charges against Bankman-Fried. Shapiro urged the court to look at the “cumulative picture” of Bankman-Fried’s decisions.
She explained that the government claimed these entities were designed to siphon customer money for Bankman-Fried’s personal use. Therefore, the fact that lawyers were involved in creating them, and drafting contracts for customer deposits, should be relevant to his good faith. It’s a reasonable enough thought, on the surface.
Judges Lee and Parker did acknowledge there was “some relevance” to the lawyers’ involvement. But they quickly circled back to the fact that Bankman-Fried’s team chose not to use a formal advice-of-counsel defense. Judge Parker put it plainly: “If you had advanced the advice-of-counsel defense, a lot of this stuff, I agree, would have been much more probative, but you gave that up.” He called the current argument a “vague, you know, ‘there were attorneys out there somewhere,’ defense.”
He even pressed Shapiro with a pointed question: “Are you seriously suggesting to us that if your client had been able to testify about the role that attorneys played in creating these various documents, the ‘not guilties’ would have rolled in?” It was a moment that showed the court’s deep skepticism. Shapiro maintained that the inability to discuss the lawyers, combined with what she called Judge Kaplan’s “asymmetric rulings on loss,” had a combined negative effect on the trial’s outcome.
Judge Parker, however, seemed to think the defense was perhaps overstating the trial judge’s role. “This was a high profile trial, both sides represented by able counsel. There was the usual back and forth and aggressive up-to-the-line advocacy. You won some things, you lost some things,” he said. He added that it seemed Shapiro was “spending more ink on Judge Kaplan than you are on the merits.” Shapiro, predictably, disagreed.
The Prosecution’s Stand
Then came the prosecution’s turn. Assistant U.S. Attorney Nathan Rehn, one of the lead prosecutors from the original trial, told the appellate court that the jury had seen “overwhelming evidence” of Bankman-Fried’s large-scale fraud against FTX customers. He was direct: “None of the claims that Bankman-Fried raises on appeal provide any basis to overturn the conviction in this case, especially in light of the overwhelming evidence that was presented at trial.”
Rehn explained that what Judge Kaplan prevented Bankman-Fried from testifying about was the *present-day* value of certain investments made with customer money. This is a key distinction. Rehn stressed that evidence about potential future recovery for victims, or a defendant’s belief in it, simply isn’t a defense against fraud. The government never argued the money was gone forever. Their case focused on the crisis of 2022, when money had been taken, and customers couldn’t make the withdrawals they were promised.
Judge Parker asked Rehn about Shapiro’s claim that Judge Kaplan was biased. Rehn denied it, saying many of the defense’s arguments at trial were “meritless,” so the court ruled against them appropriately. He went even further, suggesting that even if there had been any error, it would have been “harmless beyond a reasonable doubt.”
Rehn laid out a stark picture: “There were four people who knew about the misappropriation of customer deposits. Three of them testified that they conspired with Sam Bankman-Fried to do that fraudulently.” He added that everyone else testified they had no idea, because they relied on Bankman-Fried’s assurances. This, combined with “abundant documentary evidence,” made the case. The idea that any errors might have changed the trial’s outcome, Rehn concluded, simply “can’t be sustained on this record.”
The panel of judges didn’t issue a ruling that day. These things take time, often months after the hearings themselves. So, for now, the wait continues. What this means for Sam Bankman-Fried’s future, we will have to see.
