Nearly two years after the spectacular collapse of cryptocurrency exchange FTX sent shockwaves through the digital asset industry, its founder Sam Bankman-Fried returned to court today in a high-stakes attempt to overturn his fraud conviction and 25-year prison sentence.
The U.S. Court of Appeals for the Second Circuit heard oral arguments from Bankman-Fried's defense team, who claim the 33-year-old former crypto mogul was denied fundamental due process rights during his trial. At the heart of the appeal lies a contentious question: Was the once-celebrated billionaire entrepreneur a calculating fraudster, or the victim of a justice system that rushed to judgment?
In November 2023, a Manhattan jury found Bankman-Fried guilty on all seven counts of fraud, conspiracy, and money laundering—charges that prosecutors said constituted one of the largest financial frauds in American history. The jury deliberated for less than five hours before reaching their verdict.
According to the U.S. Department of Justice, Bankman-Fried orchestrated a scheme to misappropriate billions of dollars in customer funds deposited with FTX, defrauding investors of more than $1.7 billion and lenders to his trading firm Alameda Research of more than $1.3 billion. Prosecutors argued he directed co-conspirators to alter FTX's computer code, allowing Alameda to withdraw effectively unlimited amounts of cryptocurrency from the exchange.
The evidence against him was damning. Three of his closest associates - including ex-girlfriend Caroline Ellison, who ran Alameda Research, and FTX co-founder Gary Wang - testified against him after pleading guilty to their own charges. Ellison told jurors that Bankman-Fried directed her to commit crimes and that he believed in a form of utilitarianism where rules against lying or stealing inhibited his ability to maximize benefit for the most people.
In March 2024, Judge Lewis Kaplan sentenced Bankman-Fried to 25 years in federal prison and ordered him to pay $11 billion in forfeiture. He currently serves his sentence at the Federal Correctional Institution in Terminal Island, California, with an expected release date of October 2044.
"Never Presumed Innocent": The Appeal Strategy
Bankman-Fried's legal team, led by attorney Alexandra Shapiro, filed a 102-page appeal in April 2024 challenging both the conviction and the sentence. The defense argues that the trial was fundamentally flawed from the outset.
"Sam Bankman-Fried was never presumed innocent," the appeal brief states. "He was presumed guilty - before he was even charged. Fair trial principles were swept away in a 'Sentence first-verdict afterwards' tsunami, as everyone rushed to judgment following FTX's collapse."
The appeal centers on several key arguments. First, defense attorneys claim Judge Kaplan improperly prevented Bankman-Fried from presenting evidence that FTX had sufficient assets to meet customer withdrawals at the time of its collapse. They argue this solvency evidence could have influenced the jury's decision about whether fraud actually occurred.
Second, the defense challenges what they call an "unprecedented" preview hearing. Before Bankman-Fried testified before the jury, Judge Kaplan required him to testify in court without the jury present, allowing prosecutors to cross-examine him. The judge then ruled that certain aspects of Bankman-Fried's planned testimony - particularly regarding advice he received from company lawyers - would not be allowed in front of jurors.
"The government had obtained a free preview of Bankman-Fried's testimony, and a free practice session to better cross him when he testified before the jury," Shapiro wrote in the appeal. The defense argues this gave prosecutors an unfair advantage and violated Bankman-Fried's rights.
The Solvency Claim
In September 2025, just weeks before the appeal hearing, an account associated with Bankman-Fried posted a 15-page document titled "FTX: Where Did The Money Go?" The memo reignited his longstanding claim that FTX was never truly insolvent.
The document argues that FTX held $25 billion in assets when it filed for bankruptcy in November 2022, including billions in cryptocurrency holdings and valuable stakes in companies like artificial intelligence startup Anthropic, trading platform Robinhood, and SpaceX. Bankman-Fried contends that the exchange's collapse was caused by a liquidity crisis - an inability to meet immediate withdrawal demands - rather than actual insolvency.
His claims have found some support in the bankruptcy recovery process. FTX's bankruptcy estate has recovered between $14.7 billion and $16.5 billion in assets and has been repaying creditors throughout 2025. Under the approved reorganization plan, 98% of FTX customers are set to receive 118% of the dollar value of their claims as of November 2022.
However, this recovery percentage is deeply misleading. Because repayments are calculated based on crypto prices at the time of FTX's collapse, customers who held Bitcoin - which traded around $17,000 in November 2022 but now exceeds $96,000 - will receive only a fraction of what their holdings would be worth today. Additionally, much of the recovered value came from fortunate investments, particularly FTX's stake in Anthropic, which the estate sold for more than $880 million.
Long Odds and a Presidential Pardon?
Legal experts give Bankman-Fried's appeal slim chances of success. Overturning a conviction typically requires showing that significant legal errors occurred that likely affected the outcome of the trial. The strength of the prosecution's case - bolstered by cooperating witnesses who had direct knowledge of the alleged crimes - makes reversal particularly difficult.
"In many ways, Sam was fighting with one hand tied behind his back," criminal defense attorney Michael Bloch, who is not involved in the case, told reporters. "The jury never saw the full picture." Still, prosecutors have defended the trial's fairness in their response brief, arguing that the preview hearing may have actually helped Bankman-Fried refine his testimony.
With his legal options narrowing, speculation has grown that Bankman-Fried may seek a presidential pardon from Donald Trump. The speculation intensified after Trump's recent pardons of two prominent cryptocurrency figures: Ross Ulbricht, who founded the dark web marketplace Silk Road, and Changpeng Zhao, founder of cryptocurrency exchange Binance who pleaded guilty to anti-money laundering violations.
In a March 2025 interview with Tucker Carlson, Bankman-Fried discussed his prison experience and reflected on cryptocurrency policy, hinting at more Republican-aligned views. While he stopped short of formally requesting a pardon, the interview fueled speculation about his intentions. According to prediction markets, the odds of a Bankman-Fried pardon have increased following Trump's clemency for other crypto entrepreneurs.
What Happens Next
The Second Circuit Court of Appeals panel - consisting of three judges - will review the arguments presented today alongside the extensive trial record. The court has several options: it could uphold the conviction and sentence, order a new trial before a different judge, send the case back for resentencing, or in rare cases, overturn portions of the verdict entirely.
A decision is not expected for several months, as appellate courts typically take considerable time to review complex cases and issue written opinions. If the appeals court rules against Bankman-Fried, he could potentially petition for review by the full Second Circuit or even the Supreme Court, though higher courts accept only a small fraction of such requests.
Meanwhile, the fallout from FTX's collapse continues to reshape the cryptocurrency industry. The case has become a cautionary tale about the dangers of insufficient regulatory oversight and the concentration of power in crypto exchanges. Lawmakers have cited the FTX debacle as evidence of the need for stricter regulations, while industry advocates argue that existing fraud laws were sufficient to prosecute the wrongdoing.
For the thousands of FTX customers still awaiting full repayment of their claims, Bankman-Fried's appeal proceedings offer little comfort. While the bankruptcy process has exceeded initial expectations for recovery, many investors feel they've lost far more than money - they've lost trust in an industry that once promised to revolutionize finance.
As Bankman-Fried's parents, both Stanford law professors, watched today's proceedings from the courtroom gallery, the question remains whether their son can mount a successful legal comeback or whether he'll spend the next two decades behind bars, a cautionary symbol of crypto's most spectacular downfall.