Summary of Sam Bankman-Fried's appeal

Read time of this summary: 10m
Read time of full brief: 1h 30m

Sam has just filed his appeal brief.[1] He is appealing his conviction on the grounds that the cumulative effect of several legal errors and biases deprived him of his right to a fair trial. He seeks a new trial before a different judge.

“There was another way to view FTX’s demise. FTX quickly grew to $1 billion of revenue, and in November 2022, was still solvent and profitable—but shaken by the market conditions and resulting bank run. Its legal advisors took control, pushed it into bankruptcy proceedings and lost billions mismanaging the estate—while blaming Bankman-Fried for FTX’s collapse.”

Sam’s prosecutors will file their response by December 13, 2024.

Sam’s appeal (abridged)

The judge gutted the defense’s efforts to support their case with evidence

The prosecution argued that FTX was a scam designed to steal from customers via Alameda, so that Sam could fritter the money away on bad investments, personal luxuries, political donations, and loan repayments. To facilitate the scheme, Sam allegedly lied to customers, investors, and lenders and gave secret privileges to Alameda’s account on FTX.

According to the defense, Sam ran FTX in good faith and never intended to defraud anyone. They said that the late 2022 collapse was a liquidity—not a solvency—crisis, and that Sam reasonably believed that FTX’s loans to Alameda were permitted and backed by legitimate collateral.

The defense was barred from introducing evidence that FTX was at most a few weeks away from fulfilling all customer withdrawals when it filed for bankruptcy or that Alameda’s investments were valuable; the government, on the other hand, was allowed to present contrary evidence. The defense was precluded from demonstrating that many of the allegedly fraudulent business practices were standard in the industry and approved by lawyers. Six of seven expert witnesses were excluded. Key evidence was improperly withheld by the FTX Debtors. The judge repeatedly blocked Sam’s efforts to testify about his state of mind during relevant events, treated him with palpable derision, and arranged for a dry run of his cross-examination.

Sam testified that the alleged $8 billion of customer funds used to repay lenders in mid-2022 was in fact around $2 billion and came from Alameda’s liquid assets off of FTX. He said that the risk of clawbacks and Alameda’s permissibility to borrow funds were publicly disclosed. And when he realized months after FTX opened its own bank accounts that it was still owed the $8 billion Alameda had accepted on its behalf, he thought Alameda could cover it, as Alameda’s assets exceeded its liabilities by $10 billion. The defense was prevented from presenting evidence to corroborate this testimony.

“Sam Bankman-Fried was never presumed innocent. He was presumed guilty—before he was even charged. He was presumed guilty by the media. He was presumed guilty by the FTX debtor estate and its lawyers. He was presumed guilty by federal prosecutors eager for quick headlines. And he was presumed guilty by the judge who presided over his trial.”

Key arguments

1. The defense was prohibited from rebutting the false narrative that everyone lost all their money and from giving evidence that Sam always knew they could be repaid. The judge told the jury—falsely—that it didn’t matter anyway if Sam never intended to cause loss.

We now know that FTX and Alameda were never, in fact, insolvent—they just faced a temporary shortage of cash in late 2022. The bankruptcy estate expects to distribute $14.7 to $16.5 billion to customers, repaying them with interest.[2]

The court prohibited the defense from introducing evidence that customers could be repaid or that Sam believed they could be repaid, ruling it “immaterial as a matter of law” whether Sam intended to cause loss. The jury received false instructions relevant to all counts that intent to cause loss is not required for fraud—mere “use” or temporary deprivation of another’s money or property sufficed—and that “willfulness” simply requires knowledge of wrongdoing not illegality. The error is especially misleading considering that customers (including Alameda) “using” one another’s assets was a core feature of the product—80% of assets on FTX were in the margin lending program.

The prosecution, however, were permitted to introduce counter-evidence. They repeatedly conflated Alameda’s overall net asset value with arbitrary subsets of assets and liabilities to give the appearance of insolvency. They elicited testimony that FTX was insolvent and that customers had “never” been repaid. In closing, the government told the jury that “there is no serious dispute that around $10 billion went missing”, that FTX was "10 billion plus in the hole… deeply in the red, totally underwater”, and that it was “very clear” to Sam that Alameda “did not have the assets to cover this giant debt to FTX customers”.

2. In an illegal and unprecedented proceeding, the prosecution conducted a practice cross-examination of the defendant.

The day before Sam took the stand, the court held a private hearing on the permissibility of evidence regarding advice of counsel, after which a prosecutor cross-examined Sam on matters far beyond the scope of lawyer involvement.

The court had initially demanded a detailed written preview of the evidence, itself unprecedented for a criminal trial given its importance in the defendant’s overall testimony. Nothing in the Rules of Evidence or Criminal Procedure or the Second Circuit’s case law requires advanced disclosure of an advice-of-counsel defense and district courts do not have free-ranging ad hoc authority to invent additional disclosure requirements.

Then without warning, the court said it would not rule without first hearing the testimony. Sam was immediately deposed outside the presence of the jury. After testifying about matters where he had relied on counsel, the prosecution cross-examined him on matters straying far outside the deposition’s stated purpose. The defense objected a dozen times to the unbounded nature of the questioning, but was overruled.

The following day, the court appeared to realize the proceeding had gone off the rails and blamed defense counsel for failing to object. But they’d had no choice. They’d objected unsuccessfully to advance disclosure, their detailed written proffer was ruled inadequate, and they were then told, “[I]f you want to push ahead with the evidence you’re seeking to introduce, it’s through this hearing, if at all.” Sam’s deposition was a precondition to exercising his constitutional right to present a complete defense.

No government witness was required to testify in preview hearings, including FTX’s former general counsel who covered many of the same subjects.

3. Despite the significant participation of lawyers in the alleged misconduct, the court barred almost all of Sam’s testimony regarding legal counsel.

Sam would have testified that he relied in good faith on lawyers’ participation in several business practices at issue. The government argued that advice-of-counsel evidence was irrelevant using a cherry-picked section from a Second Circuit case that said precisely the opposite when read in its entirety. Except for one peripheral matter that the court had already mostly eviscerated, the court sided with the government, citing “potential harm to the public interest”—a rationale with no basis in law.

As a result, when the prosecution argued that loans to Sam and others were part of the theft, the defense was prevented from proving or arguing that the loans were approved by counsel. Prosecutors claimed Sam had personally set up bank accounts to steal customer funds; the defense was barred from proving or arguing that counsel proposed and approved the accounts and drafted the payment agent agreement between FTX and Alameda. The government argued that the terms of service were inherently deceptive; the defense was not permitted to prove or argue that they were drafted and approved by lawyers. The court even gave jury instructions that falsely implied the jury should ignore Sam’s testimony about the terms of service and focus only on the government’s exhibit, and falsely instructed that reliance on lawyer advice is not a defense and cannot be used to show good faith.

A defendant has a constitutional right to present admissible evidence. Apparently recognizing the issue would likely be raised on appeal, the court filed a lengthy written order after trial attempting a post hoc justification of its ruling that the testimony risked “misleading” the jury. In the case mentioned above, the Second Circuit held that deeming a defendant’s testimony “false or misleading” should not affect its admissibility—it is for the jury to decide if testimony is false, not the judge.

4. Exculpatory evidence was wrongfully withheld from the defense by the FTX Debtors who were an arm of the prosecution.

The FTX debtor estate had sole possession of much of the evidence needed to determine Sam’s guilt or innocence. Three days into the liquidity crisis, FTX counsel Sullivan & Cromwell pressured Sam into resigning and replacing himself with John Ray, who then filed a solvent FTX for bankruptcy and appointed S&C as counsel to the estate. S&C spent much of its first year on the job on prosecutorial tasks unrelated to bankruptcy. Yet despite clearly acting as an arm of the prosecution,[3] the court did not consider the Debtors or their counsel to share the prosecution’s Brady obligations, and so exculpatory evidence was improperly withheld from the defense.

The Second Circuit recently held that prosecutorial discovery obligations extend to all third parties who can be considered members of the prosecution team, which includes any entity “‘acting on the government’s behalf’ in a case” and “[i]ndividuals who perform investigative duties”.

The Debtors and their counsel went far beyond ordinary “cooperation”:

  • On the second day of the liquidity crisis, S&C—without notifying Sam, to whom they reported as CEO—contacted federal prosecutors and commenced an investigation. That evening, prosecutors requested from S&C “all of FTX’s and Alameda’s balance sheets, profit and loss statements, general ledgers, and bank account statements.”
  • The Debtors, via S&C, have since fielded over 150 government requests. In the Debtors’ own words, they "would do whatever the [g]overnment request[ed] relative to cooperation,” providing “full access to the information on a real time basis”. By February 2023, S&C had collected over 27 million documents and analyzed several hundred thousand.
  • S&C helped identify alleged criminals and witnesses. In interviews, they used prosecutors’ questions, took notes, and read the notes to prosecutors afterwards. 24 employees gave proffers to S&C.
  • The Third Superseding Indictment parroted an unprompted email from S&C drawing prosecutors’ attention to what appeared to be a transfer Sam had mentioned regarding a $45 million “hole”.
  • On January 6, 2023, the government asked[4] S&C for “anything [S&C] can determine with respect to whether FTX.com, Alameda Research, and/or North Dimension were acting as an unlicensed money transmission business”. S&C said it would review around 6,000 documents and that the Debtors would selectively waive privilege on this topic “to assist [the government’s] investigation”. A week later, the government added an unlicensed money transmitting count.
  • S&C had numerous discussions internally and with prosecutors about a “strategy” to further restrict Sam’s bail conditions. S&C reviewed the motion that became the successful detention request.
  • S&C bragged about billing the estate “tens of millions of dollars” for “reporting to the [government],” which “led to the indictment of three individuals…in record time,” as well as “lawsuits…filed by the SEC and the CFTC.”

If this is not “acting on the government’s behalf", it’s hard to imagine what is. And the coordination detectable from the record is probably just the tip of the iceberg—the Debtors and their counsel likely conducted a larger investigation than the government itself.

The defense identified documents that were likely exculpatory and requested their disclosure. The government refused to request them from the Debtors, the Debtors fought the defense’s subpoenas, and the court erroneously refused to order discovery or even to grant a hearing on the request. The government claimed that the estate and S&C had “no involvement in any significant aspect of the Government’s investigation and prosecution” and were simply acting voluntarily as cooperating third parties. Noting that billing records demonstrated frequent calls and presentations between S&C and the prosecutors, the defense also requested any Brady material disclosed to the government orally. That motion was also denied.

5. The court’s crippling $11 billion forfeiture order was illegal and unconstitutional.

The relevant statutes authorize forfeiture of specific assets derived from the crime, but not general money judgments, especially ones that permanently destroy a defendant’s ability to earn a livelihood.

The government sought an $11 billion money judgment and forfeiture of specified property. Sam challenged the lawfulness of the money judgment, which was duplicative because he had already delivered all assets of FTX and Alameda to the Debtors so that customers could be made whole. The court nonetheless entered the $11 billion money judgment and the duplicative forfeiture of specified property.

6. The case should be reassigned to a different judge.

The judge made his personal verdict plain long before the jury reached theirs. He, for example, called a defense argument that Sam did not run Alameda after stepping down as CEO “a joke”. On another occasion, he quipped that the wire fraud standards “ought not to be much of a problem for the government because god knows there’s more than sufficient evidence.”

Reassignment is called for where an objective observer might reasonably question the impartiality of the judge. Many journalists and commentators have questioned the impartiality of this judge, with one journalist observing that the judge “couldn’t or didn’t hide his disdain” for the defendant from the jury.


  1. With appendices: special appendix, Vol. 1, Vol. 2, Vol. 3, Vol. 4, Vol. 5 ↩︎

  2. One might argue that customers are not being “made whole” given the two-year delay and repayments being in dollars rather than in-kind. But much of the blame lies with the Debtors who cut into the recovery by, for instance, shutting down the profitable exchange, ignoring liquidity offers, and squandering assets. ↩︎

  3. The prosecution also benefitted from the Debtors’ and S&C’s attempts to deflect scrutiny of their own business decisions, conflicts of interest, exorbitant billing, and misconduct. Their loud, repeated claims pre-trial that FTX was worthless because Sam had stolen all the money infected public sentiment, charging decisions, witness testimony, judicial rulings, and sentencing. ↩︎

  4. The email’s recipients included four former SDNY AUSAs. ↩︎

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Thank you for providing this summary. The points raised certainly sound credible enough for the appellate court to consider calling for a new trial.

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I’m a (mostly) retired career newspaper reporter who spent an appreciable time as a courtroom observer. I read this site’s appeal summary – and then the entire appeal (skipping only some legal citations). For a clear picture of the huge miscarriage of justice that Sam’s prosecution inarguably was, just ponder the last 20 pages of the appeal.

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Thanks for highlighting this Dan. Those last 20 pages are so shocking. There MUST be a retrial with a new, unbiased judge.

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I get the sense that the last 20 pages (on how biased the judge was) is the part people generally find most shocking.

The New York Sun seems unsurprised though, and generally skeptical of the whole process…

Bankman-Fried’s lawyers write that their client “was never presumed innocent. He was presumed guilty by the judge who presided over his trial.” The presumption of innocence is a bedrock principle of the due process afforded criminal defendants…Prosecutors persuaded the jury that FTX was $8 billion in the hole. Now, Bankman-Fried argues that “FTX was never insolvent, and in fact had assets worth billions.”…Bankman-Fried…was convicted after three of his lieutenants, including his girlfriend, Caroline Ellison, reached deals with prosecutors to testify against him. Ellison is due to be sentenced this week. She contends that she ought not to be sent to prison because of her “extraordinary” cooperation with the government’s effort to convict her former boyfriend.