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Two years after a jury found him guilty on all seven felony charges related to the implosion of his FTX cryptocurrency exchange, Sam Bankman-Fried returned to court seeking to overturn the conviction and get a new trial with a new judge. Ever since the November 2022 collapse, Bankman-Fried has insisted that the company was solvent and that the shortfall was nothing more than a temporary liquidity squeeze caused by a sudden wave of withdrawals. He argues that bankruptcy proceedings — now on track to fully repay customersa — validate that claim. Those repayments, however, have been made possible largely by the post-bankruptcy increase in crypto prices and a fortuitous investment in Anthropic, whose value soared amid the consumer AI chatbot boom. On October 30, Bankman-Fried, who has recently begun posting to Twitter from behind bars via a friend, uploaded a 15-page document claiming to prove that FTX would be worth $136 billion today had the bankruptcy team not squandered the company’s assets, though the document was riddled with claims that contradict other company filings.1 Bankman-Fried has since suggested that his claims that the company was solvent are based on his own definition of “solvency”.

In addition to the solvency argument, Bankman-Fried is hoping to convince the panel that Judge Kaplan deprived him of a fair trial by prohibiting him from discussing his reliance on legal advice from FTX’s attorneys. According to his lawyer, Alexandra Shapiro, had Bankman-Fried been permitted to discuss FTX’s solvency and his conversations with lawyers, he would have convinced a jury that he never intended to steal customer funds, and was merely a man who made some mistakes while on the frontier of a nascent and complex industry. The three-judge panel has not returned a verdict on the appeal, and may well take several months to do so. However, questions aimed at Bankman-Fried’s attorney suggest they’re skeptical of his assertion that he was denied a fair trial, or that any of the arguments he’s claimed Judge Kaplan unfairly prohibited him from making would’ve swayed the jury.

Addressing the solvency claims, the judges reminded Bankman-Fried’s defense team that a crime is not absolved simply because victims are ultimately made whole. A government prosecutor argued that the evidence against Bankman-Fried was conclusive, and that several of his fellow executives testified that he knowingly misappropriated customer funds to use on investments or political expenditures. And a recent Supreme Court case closed off one of Bankman-Fried’s avenues of argument around intent, with an opinion in Kousisis v. United States earlier this year ruling that a person who fraudulently induces a victim into a transaction can still be convicted of fraud even if they didn’t intend to cause the victim to lose money.34 On the topic of legal advice, the judges questioned why Bankman-Fried opted not to bring an advice-of-counsel defense during the trial if they wished to claim Bankman-Fried was operating in good faith but led astray by bad legal advice. As I wrote shortly before the trial, there was likely a reason he didn’t opt to formally advance this defense: [T]hey've stopped short of bringing a formal advice-of-counsel defense, which would require them to show that Bankman-Fried gave his lawyers a full understanding of what he intended to do, then dutifully followed their advice in doing it. This is typically a tricky defense to pull off, and his team may have decided against pursuing it due to concerns that those lawyers could respond by sharing documents that further

The judges noted that merely having lawyers on staff doesn’t prove Bankman-Fried was operating in good faith. Circuit Judge Barrington Parker added, “If you had advanced the advice-of-counsel defense, a lot of this stuff, I agree, would have been much more probative, but you gave that up, and you just have this vague, you know, ‘there were attorneys out there somewhere,’ defense.”