Sam Bankman-Fried’s uphill battle to overturn his fraud conviction entered a critical stage this week as a three-judge panel of the US Court of Appeals for the Second Circuit pressed his attorney on why the verdict should be thrown out.
At a 4 Nov hearing, the judges expressed doubts that alleged trial errors, including limits on testimony and evidence, justified a retrial.
Prosecutors countered that the case against the FTX founder was overwhelming, citing testimony from three of his closest former colleagues, Caroline Ellison, Nishad Singh, and Gary Wang, who all pleaded guilty and cooperated.
The panel will rule in the coming months; however, historically, only a small fraction of federal criminal appeals are successful.
Was FTX solvent?
At the core of Bankman-Fried’s appeal is his claim that FTX was solvent when it collapsed in November 2022.
His team argues that the exchange faced a short-term liquidity crunch, not an $8bn deficit, and that customers would have been repaid if the company had been given more time.
A 14-page document posted on Bankman-Fried’s former X account claimed that FTX held $25bn in assets and another $16bn in equity value against $13bn in liabilities.
The filing also alleged that bankruptcy lawyers prematurely forced the firm into Chapter 11 and later sold undervalued assets, including stakes in Anthropic, Robinhood, and Ripple, that could have left FTX worth more than $130bn today.
Shapiro argued that the trial court wrongly barred testimony about these solvency calculations and about Bankman-Fried’s reliance on legal advice when structuring FTX’s finances, saying jurors were left with “only half the story.”
Pardons and policy shifts
Bankman-Fried’s legal struggle is playing out against a dramatically altered US crypto backdrop.
Binance founder Changpeng “CZ” Zhao received a presidential pardon after pleading guilty to money laundering charges, while Congress passed the GENIUS Act, the first federal framework for stablecoins and digital asset custody.
Regulators have begun signaling openness to crypto’s integration into the banking system, and major institutions are deepening exposure to digital assets.
Yet the more regulated environment offers potentially little reprieve for Bankman-Fried. The appeals court is bound to the trial record, and shifting sentiment toward crypto cannot erase the jury’s finding that he misused billions in customer funds.
With odds of reversal low, Bankman-Fried faces an arduous road and the real possibility of serving his 25-year sentence while watching a more compliant crypto industry thrive without him.
