In the November 2022 trial, Bankman-Fried was convicted on seven counts of fraud involving the defrauding of FTX’s customers, investors, and creditors. The jury determined that Bankman-Fried and his associates had misused customer deposits for risky transactions through Alameda Research, leading to FTX’s rapid downfall. Bankman-Fried has served six months of his 25-year sentence following his conviction on seven fraud-related charges.
In a 102-page appeal, Bankman-Fried’s legal team accused Judge Lewis Kaplan of bias, which they argue negatively impacted the trial’s outcome and restricted his ability to defend himself properly.
Alexandra Shapiro, leading Bankman-Fried’s defense, criticized Judge Kaplan for not allowing him to argue before the jury that FTX’s customers could potentially recover their funds through the bankruptcy process. Shapiro contends that FTX did not face insolvency, but rather a liquidity crisis due to mass withdrawals in November 2022.
“The government thus presented a false narrative that FTX’s customers, lenders, and investors had permanently lost their money,” Bankman-Fried’s lawyer wrote. “The jury was only allowed to see half the picture.”
Shapiro also argued that Judge Kaplan’s actions, such as offering free dinner and transportation to the jury, pressured them to deliver a quick verdict.
During the initial trial, prosecutors alleged that Bankman-Fried had spent billions on luxury real estate and political donations, money they claimed had vanished, resulting in significant losses for FTX’s customers and creditors. However, in the appeal, Shapiro refuted these claims, highlighting that FTX’s assets had recovered up to $16.3 billion and that efforts to restore funds to customers were ongoing.
Bankman-Fried’s legal team also accused the U.S. Department of Justice of over-collaborating with FTX’s bankruptcy lawyers, preventing him from accessing critical documents that could have aided his defense.
Furthermore, his lawyers alleged that the media, FTX’s creditors and their attorneys, along with federal prosecutors, had “prejudged” Bankman-Fried as guilty before the trial even began, denying him the opportunity for a fair trial.
Due to these reasons, Bankman-Fried is seeking a new trial under the supervision of a different judge.
If the Second Circuit Court of Appeals grants the appeal, Bankman-Fried could have a chance at a retrial. This case continues to garner significant attention within the financial and crypto communities, as FTX has become a symbol of management failure and fraud in the still-emerging cryptocurrency industry.
The appeal is the next chapter in the complex legal proceedings following the swift collapse of FTX — one of the largest and most shocking events in the global cryptocurrency industry’s history.
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