FTX founder and former CEO Sam Bankman Freed’s bets that the U.S. legal system will release him three years after the collapse of his empire may be coming to an end.
The Second Circuit will hear arguments in an appeal of Bankman Fried’s conviction and 25-year prison sentence two years and two days after a jury unanimously found him guilty of seven different counts of conspiracy and fraud.
At the Nov. 4 hearing, both the Southern District of New York prosecutors, led by former Securities and Exchange Commission Chairman Jay Clayton, and Bankman Freed’s new defense team, led by leading white-collar appellate lawyer Alexandra Shapiro, will each be given 10 minutes to argue. Panel judges may ask their own questions during the hearing to clarify details.
The hearing will not review the charges themselves, but whether the trial was conducted properly.
According to the team’s opening brief filed in September 2024, appellant Bankman Fried seeks a new trial before a new judge. The team argued that Louis Kaplan, the district judge who oversaw Bankman Fried’s trial, was biased against the former FTX CEO and made unfair statements throughout the trial that undermined the defense. He has a high bar to clear, according to a lawyer who spoke with CoinDesk about the process.
Prosecutors argued in opening briefs that the trial was conducted properly and that Bankman-Fried’s conviction and sentencing meant justice was served.
Bankman Freed’s path to victory
Etherealize general counsel Steve Yelderman told CoinDesk that the former FTX CEO’s team will at least have to prove that the district court erred in overseeing the case.
Howard Fisher, a partner at Moses Singer, said in an interview with CoinDesk TV that the defense’s argument was essentially that “the very way the court tried the case was inherently unfair.”
During the 2023 trial, the defense made a number of motions that the district court (Judge Kaplan) rejected, but the defense had to save them for appeal this week.
“You have to say, ‘Hey, this is bias,’ or ‘Hey, this is wrong jury instructions, and I’m going to tell the district court right now,'” Mr. Elderman said. “The district court ruled against them, but then they can take it to the Court of Appeals and say, ‘No, we made this argument. The district court rejected it. That was a mistake, and that could have made a difference.'”
One of the arguments supported by the defense is that comments Kaplan made about various questioning during the trial may have influenced the jury. Mr. Yelderman said he believed this would be a difficult argument, and said the judge’s comments could also be found in the 3,000-page court record that undermined the prosecution’s efforts.
“This is a very routine hearing and I don’t have high expectations for this,” he said.
Fisher said appellate courts are “very reluctant to interfere with the way a trial court proceeds,” especially in complex cases. And even if the judge made some mistake, the appellate court may not overturn the result if it is “still fundamentally fair.”
Wizards attorney Martin Auerbach told CoinDesk that one area the committee could pursue is a dry run before Bankman Fried testifies to the jury during the trial.
During the 2023 trial, Judge Kaplan said he wanted to hear some of the defense’s arguments to determine whether they would be allowed to discuss them before the jury. Bankman Freed’s lawyer at the time, white-collar litigator Mark Cohen, called it a “deposition.”
“Defendants have the right to tell the jury their side of the story without first having to convince a judge to believe it. If testimony is admitted, it is up to the jury to decide whether it is true,” the defense argued in a brief.
Auerbach called the action “unusual,” adding: “This preliminary testimony — in effect, Bankman Fried’s deposition — was highly unusual, and while judges always have discretion to balance probative value with prejudice, this process was highly unusual.”
The Justice Department argued in its filing that there is no issue here and that, in fact, the district court judge must “determine the question of admissibility.”
This dry run could help the defense persuade the circuit court panel to reconsider the entire proceeding. In particular, the defense may argue that the judge gave and limited discretion to the prosecution over the defense.
Auerbach said the committee could question whether the testimony functionally allowed “the government to take two bites of the apple of cross-examination,” or whether it allowed more one-sided evidence to be presented.
“Hearing such a question, the court may conclude that it has some concern for the full fairness to which all defendants are entitled,” he said.
victim loss
Thanks to a Supreme Court decision handed down in the summer, Bankman Fried’s team has already lost some of its claims before hearings even begin. The Supreme Court issued a unanimous decision in the case of Koussis et al. Al. v. United States, a party who receives funds from another party under misleading pretenses may be convicted of fraud, even if the party did not intend to cause financial harm to the perpetrator.
This resolves an outstanding issue in federal wire fraud law, Mr. Elderman said. In Bankman Freed’s case, his team is trying to argue that they did not intend to defraud the victims and that people would eventually get their money back.
Under this case law, he said, that doesn’t matter; “you just have to show that you as the perpetrator intended to obtain the money for yourself.”
“Just because it turns out I stole your money, that I invested it well and am now able to pay you back, that’s not a defense,” Auerbach said.
He said the original purpose was to steal money. If the defense attempts to argue that the judge allowed the Justice Department to focus too much on FTX’s loss of customer and investor money, the evidentiary review here could come up in an appellate court hearing.
“If you think what you’re doing is reasonable and prudent, when you lie to people about it, you’re touching upon the argument that what you’re doing is doing something other than deceiving people,” he said. “So whether or not they lost money, even if they ultimately had money left over to pay them back, we can infer from your dishonesty that you intended to mislead and defraud people.”
Appeal procedure
A lengthy hearing with many questions could bode well for Bankman Fried, all three lawyers said.
If the justices become deeply involved in the hearing and ask the Justice Department to explain various aspects of the case, that could be a sign that they are considering whether to order a new trial, Mr. Elderman said.
On the other hand, if the hearing is short and quick, “that’s a pretty good sign that the court is leaning toward just affirming the conviction,” he said.
Fischer said the questions the jurors ask Bankman Fried’s team can also tell which side they’re leaning toward.
Auerbach similarly said that if the panel pursues a line of questioning, that could signal that the judge has concerns.
“If they stay very narrow within the parameters and ask questions that challenge the defense, such as what is the appropriate standard of review, then you can see that it is consistent with straightforward, day-to-day litigation procedures,” he said. “If they think this is very simple, they’re unlikely to reverse it.”
And when a judge lets the parties make their case with few questions and tells lawyers they will issue an opinion when they are able, “that also says a lot,” Fisher said.
possibility of pardon
In case the appeal fails, Bankman Fried and her team appear to still be lobbying for a presidential pardon, including an appearance on Tucker Carlson’s show earlier this year and a series of posts shared by a purported friend on X (formerly Twitter) in recent weeks. On Thursday, his account posted a document dated September 30, 2025, titled “Where Did the Money Go?” and claimed that “FTX was never insolvent.”
He is having a hard time there too. US President Donald Trump has granted pardons to a number of crypto executives this year, including Binance founder Changpeng “CZ” Chao, but Bankman Fried appears unlikely to receive a pardon.
First, Chao and his former company Binance have business ties to Trump and his family group. Bloomberg and the Wall Street Journal both reported that Binance employees were involved in the development of Trump family-linked World Liberty Financial’s USD1 stablecoin. Other pardoned executives, like BitMEX’s Arthur Hayes, have hired lobbyists to gain sympathy from the broader crypto industry.
And while Bankman Fried has tried to claim that he supported both Democrats and Republicans in past elections, his reputation still appears to be tied to his donations to Democrats, including a $6 million donation to former President Joe Biden’s campaign, which helped unseat Trump after his first term. As for Trump, Bankman Fried is reportedly considering paying him $5 billion not to run for re-election.