Sam Bankman-Fried facing American justice: a tense appeal hearing

Sam Bankman-Fried, former fallen crypto icon, plays his last card in court. Sentenced to 25 years in prison for fraud, the former CEO of FTX is contesting his trial in a federal appeals court in New York. His defense says the company was not insolvent and customers could have been refunded if time had not run out. A strategic recourse, which could disrupt the legal reading of the collapse of one of the largest crypto empires.

Appeal judges unreceptive to the solvency argument

At the Nov. 5 hearing before the Second Circuit Court of Appeals, Sam Bankman-Fried's attorney, Alexandra Shapiro, made a central argument. According to her, FTX would have been able to reimburse its customers if the company had had more time before its collapse, while predictive markets are inflamed over the fate of SBF.

“Customers would have gotten their money back”she asserted. This line of defense immediately triggered critical reactions from the judges. Judge Barrington Parker Jr. expressed his skepticism explicitly: “It almost seems like you are devoting more ink to Judge Kaplan than to the merits of the case.” This comment reflects the court's annoyance with a strategy perceived as diverting the debate from substance to form.

The judges' questions revealed several points of tension that weaken the defense position:

• The absence of concrete proof that FTX could have actually reimbursed its customers, even with more time;

• The hypothetical nature of the argument, which is based on alternative scenarios without any new material basis;

• The lack of focus on the facts, according to the judges, in favor of a strong criticism of the management of the trial by Judge Lewis Kaplan;

• Doubt about the relevance of retrying the case, given the solidity of the elements presented at the first trial.

As former federal prosecutor Samson Enzer summed it up: “Although the defense demonstrated tenacity, the general tone of the questions asked demonstrates deep skepticism on the part of the panel.” As it stands, the argument of delayed solvency struggles to convince magistrates that a judicial error would justify a new trial.

The Lingering Shadow of Alameda and Embezzled Funds

Beyond the question of the timetable put forward by the defense, the heart of the case still rests on the opaque management of client funds within FTX and their massive transfer to Alameda Research, the sister company also founded by SBF.

During the appeal hearing, prosecutors unambiguously recalled that “Customer money was not held securely on FTX” and reiterated that $8 billion was moved to Alameda to fund risky investments and political donations. These elements, already central during the 2023 trial, continue to weigh heavily in the examination of the appeal, because they cast doubt on any presumption of good faith.

The defense tried to argue that Sam Bankman-Fried acted under the advice of his lawyers and never intended to deceive anyone. This argument was considered interesting and significant by Samson Enzer during the first trial.

However, Judge Kaplan had largely restricted the introduction of evidence on this subject. The defense team believes this limitation constitutes a procedural error that could warrant a new trial. However, the appeal magistrates showed little interest in reversing this decision, focusing their remarks on the direct responsibility of the accused in the management of the funds.

If the appeals court were to reject the request for a new trial, SBF's conviction would remain unchanged, with a 25-year prison sentence already underway. A possible acceptance of the appeal would open the way to a new high-profile trial, likely to redefine responsibilities for the collapse of FTX and regulatory standards in the crypto universe. In any case, this new legal episode serves as a reminder that the consequences of the FTX affair continue to fuel debates on transparency, governance and systemic risks in the sector.