Sam Bankman-Fried, serving 25-year sentence, faces a skeptical appeals court as his lawyers ask for a retrial

• An appeals court on Tuesday weighed whether Sam Bankman-Fried had a fair trial.
• The FTX founder was sentenced to 25 years after a jury found him guilty of an $11 billion fraud.
• His lawyers said he should get a new trial after prosecutors unfairly previewed his testimony.

When Sam Bankman-Fried prepared to testify in his own criminal trial, things didn’t go according to plan.

Bankman-Fried wanted to tell jurors his side of the story. Part of that story, in his view, was that he received advice from company lawyers that made him think everything he did was OK.

US District Judge Lewis Kaplan, who oversaw Bankman-Fried’s 2023 criminal trial, wasn’t so sure. The judge had Bankman-Fried testify in court without a jury and allowed prosecutors to cross-examine him. Afterward, the judge ruled that the purported advice he got from lawyers was irrelevant to the case and would only confuse jurors.

Bankman-Fried still testified for the jury the following day, but he wasn’t allowed to talk about everything he wanted to.

On Tuesday morning, a panel of three judges on the Second Circuit Court of Appeals heard oral arguments that focused on whether one of crypto’s most notorious figures was deprived of a fair trial.

Bankman-Fried’s parents followed the arguments from their seats in the courtroom gallery. As the judges asked skeptical questions to his lawyer Alexandra Shapiro, Joe Bankman looked down at his striped blue tie and frowned. With shaking hands, Barbara Fried turned her glasses in her fingers and opened and closed its red temples.

Two of the three judges — Barrington Parker, Jr., and Maria Kahn — appeared skeptical that Bankman-Fried’s trial lawyers could have mustered up any relevant evidence that would have changed the outcome.

“It may not have been a perfect trial,” Parker, Jr. told Shapiro. But, the judge said, there was “robust evidence” against Bankman-Fried. Would testimony about potential customer recovery or purported input from lawyers have made a difference?

“These are arguments for the jury to weigh,” Shapiro told the judges. “They should not be taken away from the jury.”

SBF’s limited trial defenses

At his trial, held across the street from Tuesday’s appeals court hearing, jurors convicted the FTX cofounder and former CEO of eight criminal counts, for several varieties of fraud and money laundering. Kaplan sentenced Bankman-Fried to 25 years in prison.

According to prosecutors, Bankman-Fried orchestrated an $11 billion fraud scheme. He took money belonging to depositors of FTX, his cryptocurrency exchange, and commingled it with Alameda Research, his hedge fund.

Bankman-Fried and his co-conspirators used that money for advertising, investments, luxurious Bahamas real estate, and political donations — all while misleading investors and lenders about where the funds were going.

In the Tuesday hearing, Shapiro said the trial was “asymmetrical.” She said prosecutors were able to tell jurors that the money from the collapse of FTX was gone forever, while his defense team wasn’t able to tell them it could be recovered. At the trial, Kaplan forbade Bankman-Fried’s lawyers from arguing that FTX was solvent and that depositors would get all their money back.

“Mr. Bankman-Fried’s trial was fundamentally unfair because the jury got to hear only one side of the story, the prosecution’s side, which was demonstrably false.”

Bankman-Fried’s lawyers couldn’t tell jurors what they argued in court papers, which was that Bankman-Fried’s investments were just that — investments, not theft.

In particular, FTX made a $500 million investment in the now-red-hot artificial intelligence company Anthropic. That 8% stake would be worth more than $14.6 billion today. (FTX’s bankruptcy attorneys sold the Anthropic holdings at lower valuations to repay creditors.)

Bankman-Fried failed at risk management, not because he was a criminal fraudster, his lawyers said.

Shapiro, in the appeal, took issue with the preview hearing Kaplan ordered. She described it as a “deposition” and said it was “unprecedented.”

“The government had obtained a free preview of Bankman-Fried’s testimony, and a free practice session to better cross him when he testified before the jury,” she wrote in her appeal brief.

Much of Tuesday’s oral arguments focused on Kaplan’s ruling following the hearing, which barred Bankman-Fried from testifying about lawyers helping establish the FTX subsidiaries that prosecutors later said facilitated the fraud. According to Shapiro, Bankman-Fried could have pointed to their presence to argue to the jury that he was doing everything in good faith.

Parker appeared skeptical that the “not-guilty verdicts would have rolled in” if Bankman-Fried was able to tell that story to jurors.

“The fact that an attorney drafted an agreement between subsidiaries — tell me what that has to do with any of the charges here?” he asked.

Shapiro urged him to “look at the whole picture” in the case.

“I’m trying very hard to,” Barrington responded, to some laughter in the courtroom.

Prosecutors said in their appeal brief that Bankman-Fried’s trial was fair. While his preview hearing may have been unprecedented, “the absence of precedent cannot establish plain error,” they wrote.

In fact, the practice might have even helped him, they said.

“It is equally plausible that Bankman-Fried benefited from first testifying outside the presence of the jury — in his trial testimony, he avoided the long-winded answers that had come across as evasive, and abandoned certain assertions that fell apart on the stand,” they wrote in the brief.

Assistant US Attorney Nathan Rehn — who, like Shapiro, clerked for former Supreme Court Justice Ruth Bader Ginsburg — asked the judges not to disturb the conviction.

All three judges, however, appeared to take issue with the $11 billion in forfeiture Kaplan required as part of Bankman-Fried’s sentence, which would remain in effect after FTX’s bankruptcy proceedings are over. Eunice Lee, one of the judges on Tuesday’s panel, asked whether such a titanic number had a “penal justification.”

Bankman-Fried’s parents both declined to comment following Tuesday’s hearing.

Bankman-Fried is serving his sentence at FCI Terminal Island, a low-security prison in the Los Angeles area, while fishing for a pardon from President Donald Trump.

This story has been updated.