Appeals court judges question Sam Bankman-Fried's claims over FTX solvency

Arguments made by former FTX CEO Sam Bankman-Fried's lawyer in a bid to get a new trial may not have been all that convincing, said former federal prosecutor Samson Enzer.

On Tuesday, in front of the U.S. Court of Appeals for the Second Circuit, Bankman-Fried's lawyer, Alexandra Shapiro, argued that customers would have been repaid if there had been enough time — a claim that received pushback from the judges, according to reporting from Inner City Press inside the courtroom. 

"While SBF’s counsel made a valiant effort, several of the questions and remarks from the panel during the argument revealed deep skepticism of SBF’s appeal, including, for example, when Circuit Judge Barrington Parker Jr. remarked to SBF’s counsel that 'it almost seems like you’re spending more ink on Judge Kaplan than on the merits,'" Enzer, who is now a partner at Cahill Gordon & Reindel LLP, told The Block after the hearing. 

Bankman-Fried filed an appeal requesting a new trial in September 2024. At the time, a lawyer representing the former executive criticized New York Judge Lewis Kaplan's handling of the case and said Bankman-Fried should not have been blocked from introducing certain evidence.

Enzer previously told The Block that Bankman-Fried's claim that he had acted in good faith on the advice of his lawyers prior to the collapse of FTX was his "most interesting and significant" argument. Kaplan largely limited evidence related to this so-called "presence of counsel" defense.

The former exchange executive was found guilty in November 2023 by a jury in New York of all seven criminal counts of defrauding the customers, lenders, and investors of FTX. He was sentenced to 25 years in prison.

During the hearing, prosecutors said that customers' "money was not being held safely" on FTX and that $8 billion had gone to Alameda Research for investments and political donations, according to reporting from ICP. Hedge fund Alameda Research was instrumental to FTX, both of which were founded by Bankman-Fried.

Prosecutors previously accused Bankman-Fried of disguising political contributions via “wealthy co-conspirators,” when the funds allegedly belonged to FTX customers and had been transferred to Alameda. A separate trial accusing Bankman-Fried of a single count of conspiracy to make unlawful campaign contributions was dropped; however, evidence related to his political spending was presented as part of the broader fraud and conspiracy case during his main trial.

The court will issue an opinion on the possibility of Bankman-Fried's retrial over the next several months.