SBF Appeal Hearing: FTX's Solvency Argument Questioned by Judge, Hope for Reexamination Slim

During the appeal hearing of former FTX CEO Sam Bankman-Fried (SBF), the judges of the U.S. Court of Appeals for the Second Circuit expressed strong skepticism regarding SBF's core defense argument—that “if given enough time, customers could have been repaid.” Despite SBF's lawyers attempting to secure a retrial, the judges' pointed questions and the prosecution's allegations regarding the $8 billion of customer funds flowing to Alameda Research made SBF's hopes for a new trial seem slim.

SBF Appeal Strategy: Questioning the Sentencing and Evidence of the Original Trial Judge

SBF's appeal centers around the accusation that the original trial judge, Lewis Kaplan, handled the case improperly and restricted the presentation of evidence favorable to him.

• Reexamination request: SBF's lawyer Alexandra Shapiro submitted an appeal in September, seeking a new trial. She criticized Judge Kaplan's handling of the case and argued that SBF should not be prevented from introducing certain evidence.
• Core defense hampered: SBF's most interesting and important argument is that he claims to have acted on the advice of lawyers before the collapse of FTX (i.e., the “defense of having a lawyer present”). Judge Kaplan largely limited the evidence related to this defense.

Judge Questions: The Argument for Solvency Lacks Persuasiveness

In the appeals court, the judges expressed deep skepticism about the key arguments put forth by SBF's lawyers.

• Core Controversy: SBF's lawyers argue that, given enough time, FTX's customers could be repaid. However, according to court reports, the appellate judges have refuted this claim.
• Signs of Doubt: Former federal prosecutor Samson Enzer commented that the judge's questions and remarks “demonstrate a deep skepticism toward SBF's appeal.” For instance, Circuit Judge Barrington Parker Jr. pointed out to SBF's lawyer, “It almost seems like you’re spending more ink on Judge Kaplan than on the substance of the case.”

Key Points of Prosecution: Client Funds Flow to Alameda

The prosecution reiterated the key facts of SBF's misappropriation of client funds during the appeal hearing to refute his claims of innocence.

• Misappropriation Facts: The prosecution pointed out that customers' funds were not securely held on FTX, and 8 billion dollars of customer funds were transferred to Alameda Research for investments and political donations.
• Political Donations: Although the separate charge against SBF for conspiring to make illegal campaign contributions was dismissed, evidence related to his political spending was presented in the main trial as part of the fraud and conspiracy case.

Conclusion

SBF's defense in the appeal regarding FTX's solvency and the original trial judge's mishandling faced severe challenges in the appellate court. The judge's questioning and the prosecution's strong evidence of client funds being misappropriated significantly reduced SBF's chances of obtaining a retrial. The court will issue its opinion on the possibility of a retrial in the coming months.