The jury that convicted Sam Bankman Freed of stealing billions of dollars from clients of his crypto exchange, FTX, saw “only half the picture” because the judge denied key evidence, his lawyers argued in an appeal on Friday.
In a 102-page brief filed with the U.S. Court of Appeals for the Second Circuit, Bankman Freed's lawyers said U.S. District Judge Lewis Kaplan erred in preventing the 32-year-old former billionaire from presenting evidence to support his belief that FTX had enough funds to cover customer withdrawals.
“The government falsely represented FTX's customers, lenders and investors as permanently losing their money,” attorney Alexandra Shapiro wrote in a letter asking the appeals court to overturn Bankman Freed's conviction and 25-year prison sentence. “The jury was only allowed to see half the picture.”
A representative for the U.S. Attorney's Office in Manhattan, which filed the charges, declined to comment.
Criminal defendants face a high bar to overturn a conviction, as they must prove that the judge made an error so significant that it affected their sentence.
FTX declared bankruptcy in November 2022 after experiencing massive outflows of funds from clients, marking a rapid fall from grace for Bankman Freed, who had earned a reputation as an honest broker in the fiercely competitive crypto industry and made a name for himself through large charitable and political donations.
FTX says that customers will be entitled to 100% recovery on claims against the company, based on the value of their accounts at the time the company filed for bankruptcy.
The price of cryptocurrency at the time was lower than it is now, so some customers felt they had lost out.
In a criminal complaint filed in December 2022, prosecutors accused Bankman Freed of stealing $8 billion in client funds to cover losses at his cryptocurrency hedge fund, Alameda Research.
During his trial in late 2023, Bankman Freed admitted to making mistakes in running FTX but testified that he never stole any funds.
He placed much of the blame on other FTX executives.
The jury didn't believe his story and found him guilty of two counts of fraud and five counts of conspiracy. When sentencing Bankman-Freed in March, Judge Kaplan said Bankman-Freed knew what he was doing was wrong but “took a very bad gamble about the chances of getting caught.”
Bankman Freed is currently being held at the Metropolitan Detention Center in Brooklyn.
