FTX’s founder Sam Bankman-Fried (SBF) has decided to go another mile after his appeal by the US government in fraud charges, as his attorneys are appealing again that his conviction was marred by a pattern of evidence suppressed from his side, claiming the judgment be quashed, retried before another judge because judicial bias likely contaminated the process leading to the jury verdict against him.
In a court filing on January 31, the lawyers for Bankman-Fried argued that the trial was unfair and that essential evidence was withheld. They request a new trial, arguing that a different judge should preside over the case. At the heart of the argument is a belief that the customers of FTX did not actually lose money. They further argue that the creditors will recover more than the losses incurred during the mishap. There is proof in the form of investments in companies like Anthropic, Solana, and Mysten Labs made by FTX for asset recovery.
Bankman-Fried Insists FTX Customers Didn’t Lose Money
Bankman-Fried’s defense team argues that the FTX customers who lost funds in the crash will ultimately be made whole. They emphasized that FTX’s investments in a number of high-profile companies—such as the AI company Anthropic—have substantially grown in value, helping creditors recoup losses.
His lawyers pointed to the case of Anthropic, in which Bankman-Fried invested about $500 million for a significant share of the company. The company has since become worth $60 billion, thereby raising Bankman-Fried’s return from the investment. His lawyers claim that this was evidence of his sound investment sense, citing that, had FTX been given sufficient time, the same investments he made could have helped restore solvency to the company.
“Consider Anthropic,” Bankman-Fried’s lawyers wrote in the appeal. “Bankman-Fried invested early in Anthropic—purchasing a substantial share for approximately $500 million. The company is now worth $60 billion, earning a return multiples over. His investment was brilliant.” The defense team suggests that the value created by such investments should help vindicate their client, and that FTX creditors will see their losses restored, even if they didn’t realize it at the time of the exchange’s collapse.
Suppressed Evidence and Legal Counsel’s Role
Another significant factor of Bankman-Fried’s defense is his argument that critical evidence was withheld during the trial. His lawyers have argued that they were barred from presenting critical documents that showed Bankman-Fried had made his decisions at FTX based on the advice of legal counsel. The defense has maintained that the company’s policies were shaped in consultation with attorneys and that the legal advisors had given their imprimatur for his actions.
However, the court supposedly refused to admit this evidence, which would have proven that Bankman-Fried was acting in good faith due to the guidance of experienced legal advisors. This, according to his legal team, is a critical omission that requires a retrial.
Alleged Conflicts of Interest with FTX’s Legal Advisors
Bankman-Fried’s lawyers also claim that FTX’s legal representatives, Sullivan & Cromwell (S&C), have conflicts of interest. They argue that the firm was deeply involved in FTX’s operations before the exchange’s collapse but only began labeling the commingling of funds as a crime after FTX faced a liquidity crisis in November 2022.
“Instead of recusing itself, S&C suddenly claimed this commingling was a crime after the November 2022 run on deposits. S&C then affirmatively reached out to prosecutors without notifying Bankman-Fried, its then-client, to invite this prosecution,” the lawyers argued. According to this argument, the legal team believes that S&C’s actions were improper and played a critical role in setting the stage for Bankman-Fried’s indictment, undermining the fairness of the trial.
The $11 Billion Repayment Ruling
What might be the most contested issues in Bankman-Fried’s ongoing legal procedure is the ruling demanding his repayment of more than $11 billion to creditors. His defense lawyers claim the ruling is “unlawful” and “indefensible,” saying that Bankman-Fried has already handed over all of his assets and it was not possible for him to pay this astronomical amount in fines.
“There is zero chance Bankman-Fried—who already turned over all his assets—could ever repay $11,020,000,000, or anything close,” the defense wrote, adding that the court’s order to repay the full amount was unrealistic and unfair given the circumstances.
The Chase for a Presidential Pardon
The new appeal by Bankman-Fried is amid speculations that are increasing with regard to the possibility of his parents working behind the scenes to gain a presidential pardon. This further adds to the complexity of the drama in court. Meanwhile, FTX creditors continue to wait for repayments as the bankruptcy process continues, and how this appeal will pan out remains to be seen.
With his legal team continuing to make a push for a new trial, it’s not surprising that the case against Bankman-Fried is indeed attracting more attention. According to his defense, he was a victim of a flawed trial process, one that suppressed critical evidence and overlooked key financial decisions that could have salvaged FTX. Be this as it may, whether his appeal is successful or not, his case has opened questions on the fairness of the legal process in high-profile financial scandals.
With the trial and appeal process ongoing, all eyes remain on Bankman-Fried’s legal team as they continue their efforts to secure a new trial. The outcome of this appeal could have far-reaching implications for the cryptocurrency industry, as it underscores the complex intersection of law, finance, and technology in the modern age.
