This week, the Second Circuit Court of Appeals heard arguments in Sam Bankman-Fried’s appeal of his criminal conviction. The three-judge panel appeared skeptical of his attorney’s arguments.
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The narrative
FTX founder Sam Bankman-Fried’s appeal has always faced significant challenges. Senior Judge Lewis Kaplan, who presided over the trial, is well-respected, and the threshold for a new trial is quite high.
Why it matters
Unless a presidential pardon occurs, this hearing may represent Bankman-Fried’s final opportunity for early release from prison. While he has been posting on social media through a friend, the legal proceedings are set to continue into November.
Breaking it down
Circuit Judges Eunice Lee, Maria Araújo Kahn, and Barrington Parker showed skepticism regarding appellate attorney Alexandra Shapiro’s claims that Bankman-Fried did not receive a fair trial.
To summarize, the appeal requested a new trial with a different judge because Bankman-Fried and his team believe Judge Kaplan was biased against him. Their filing stated that Bankman-Fried was not allowed to argue about listening to lawyers or that FTX’s creditors would be compensated.
“The defense was cut off at the knees by [Judge Kaplan’s] rulings,” Shapiro said midway through the hearing.
The judges did not seem convinced by her arguments. Judge Kahn inquired about the nature of FTX’s financial struggles, suggesting that the issue was liquidity rather than solvency, and pointed out a recent Supreme Court ruling indicating that simply taking funds can justify fraud charges.
Martin Auerbach, a counsel at Withers, noted that if the panel asked probing questions regarding the proceedings, it could indicate significant concerns about impartiality.
Shapiro highlighted during the hearing that the preview hearing was unprecedented and could set a troubling precedent if allowed.
Judge Barrington Parker questioned, “are you really suggesting that if your client had been able to testify about the role attorneys played in creating documents, the verdict would have been different?”
Shapiro attempted to use news reports to support her assertion that Judge Kaplan may have been biased against Bankman-Fried during the trial.
“Any objective observer can see that the rulings are heavily one-sided,” she argued, adding that the defense faced an imbalanced situation that hindered Bankman-Fried’s ability to present his case effectively.
Assistant U.S. Attorney Thane Rehn, who led the prosecution, maintained that his team did not hinge their case on how FTX’s bankruptcy would conclude.
Rehn stated that Judge Kaplan was not biased but acknowledged that while the defense may have faced more objections, none were significant enough to affect the trial’s outcome.
In contrast to their inquiries for Shapiro, the judges mostly focused on Rehn about the $11 billion forfeiture amount and its justification.
Judge Lee asked how they could justify the amount if it was presumed that all victims would be compensated, noting that market fluctuations could dramatically impact the value of crypto assets.
The panel did not explicitly reveal their opinion on the appeals motion, and it may take time for them to release a decision.
In other court cases:
- Samourai Wallet developer Keonne Rodriguez was sentenced to five years in prison after pleading guilty to conspiracy to operate an unlicensed money transmitter. Judge Denise Cote expressed concern that Rodriguez had not fully recognized the seriousness of his actions. Fellow developer William Lonergan Hill is set to be sentenced soon.
- The judge in the DOJ case against Anton Peraire-Bueno and James Peraire-Bueno declared a mistrial after jurors could not reach a unanimous decision. The brothers faced charges related to a significant crypto theft involving exploiting MEV-boost technology. The trial began in mid-October.
This week
- No hearings or regulatory events are scheduled, as the House of Representatives remains out of session.
If you have thoughts or questions on topics for next week or any feedback, feel free to email me or reach out on social media.
See you next week!
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