Bankman-Fried runs into skeptical judges at appeal of FTX fraud verdict

On Tuesday, lawyers argued that judges wrongly blocked Bankman-Fried from telling the jury that FTX had enough assets to repay exchange customers. Photo by Michael M. Santiago/Getty Images/Postmedia files

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Bankman-Fried’s lawyers claim he was wrongly convicted in a rush to judgment by the press, prosecutors, the team that took over FTX in the wake of its stunning implosion, and, critically, United States District Judge Lewis Kaplan.

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“The defence was cut off at the knees by the judge’s rulings,” his lawyer Alexandra Shapiro, said at the hearing at the 2nd U.S. Circuit Court of Appeals in New York.

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A jury in Manhattan found Bankman-Fried, 33, guilty in 2023 of seven criminal counts including fraud and conspiracy at his popular cryptocurrency exchange. The trial was closely watched by the industry and by the broader public, making him the perceived face of greed and mismanagement in the market for digital currencies.

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The government claimed Bankman-Fried siphoned billions of dollars from FTX customers to the exchange’s sister hedge fund, Alameda Research, using the money for speculative investments, political donations and expensive real estate. Jurors found him guilty in less than five hours of deliberations, despite watching him take the stand in his own defence and testify that he never intended to defraud anyone.

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But the appellate court appeared skeptical when Shapiro implored them to “look at the full picture” of the appeal.

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“I am trying really hard to,” Judge Barrington Parker Jr. replied. “It almost seems like you’re spending more ink on Judge Kaplan than on the merits.”

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The addition of Shapiro to Bankman-Fried’s legal team was considered a coup for the former crypto celebrity. A top criminal appeals lawyer who has won reversals this year for three executives convicted of white-collar crimes, she notched her most recent win on behalf of Iconix Brand Group founder Neil Cole, who was cleared by the 2nd Circuit last week after his conviction on charges he inflated the apparel licenser’s earnings and misled investors.

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Shapiro is also working on appeals for music producer Sean “Diddy” Combs, Bill Hwang of Archegos Capital and Charlie Javice, who was convicted of defrauding JPMorgan Chase & Co in the sale of her online student-finance site.

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In their appeals briefs, Bankman-Fried’s lawyers focused on Kaplan, 80, who has been a federal court judge since 1994. They accused the judge of “repeatedly putting a thumb on the scale to help the government and thwart the defence.” They’re asking for a new trial with a different judge.

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Bankman-Fried’s team argued that the judge pressured jurors into a quick verdict by suggesting they could stay late on the first day of deliberations, offering them free dinner and a car service home. His lawyers said the judge “continually ridiculed Bankman-Fried, criticized his demeanor, and signalled his disbelief of Bankman-Fried’s testimony.”