Appeals Panel Questions Fairness of Sam Bankman‑Fried’s Trial as Lawyers Push for Retrial

Appeals court reviews whether Sam Bankman‑Fried received a fair trial

An appeals panel on Tuesday examined whether Sam Bankman‑Fried, the former FTX founder now serving a 25‑year sentence, was denied a fair trial after a lower court ordered him to testify outside the jury's presence and then barred key testimony.

Bankman‑Fried was convicted in 2023 on eight counts related to an alleged fraud scheme prosecutors say diverted roughly $11 billion in customer funds from FTX to Alameda Research and other uses. His lawyers have asked the U.S. Court of Appeals for the Second Circuit to overturn the conviction or order a new trial, arguing that pretrial procedures gave prosecutors an unfair advantage and prevented the jury from hearing his full defense.

At issue was U.S. District Judge Lewis Kaplan’s decision to hold a hearing during which Bankman‑Fried testified outside the jury’s presence and was cross‑examined by prosecutors. After that hearing, Kaplan ruled that several topics — notably alleged legal advice from company counsel and details about the formation of FTX subsidiaries — were irrelevant or likely to confuse jurors. Bankman‑Fried then testified before the jury but was barred from addressing those topics.

Lead appellate attorney Alexandra Shapiro told the appeals panel the out‑of‑jury preview amounted to a “free preview” that sharpened the government’s cross‑examination and deprived jurors of a complete account of Bankman‑Fried’s state of mind and business decisions. The defense argued the case was “asymmetrical”: prosecutors were allowed to present evidence that customer funds were gone, while the defense was prevented from explaining that some assets remained or that certain transfers were investments made in good faith.

Shapiro highlighted a $500 million FTX stake in artificial‑intelligence firm Anthropic — reportedly an 8% position that some estimates suggest could be worth more than $14.6 billion today — as an example of assets the defense wished to present to jurors. Bankruptcy trustees later sold the Anthropic holdings at lower valuations to repay creditors.

Two judges on the three‑judge panel — Judges Barrington Parker Jr. and Maria Kahn — questioned whether the excluded testimony would likely have changed the jury’s verdict, noting the strength of the evidence presented by prosecutors. “It may not have been a perfect trial,” Judge Parker said, but asked whether testimony about attorney involvement or potential recoveries would have moved jurors to acquit.

Prosecutors defended the trial’s fairness in their brief, acknowledging the preview hearing was unusual but arguing the lack of precedent does not establish reversible error. They also suggested the preliminary testimony may have helped Bankman‑Fried refine his answers and avoid long, evasive responses when he later testified before the jury.

All three judges expressed concern about another contentious element of the sentence: the $11 billion forfeiture order that Judge Kaplan imposed. Judge Eunice Lee asked whether such a sweeping forfeiture had a sound penal justification given parallel bankruptcy proceedings and questions about what sum is appropriate to return to creditors.

Family members watched from the gallery during arguments. Bankman‑Fried is serving his sentence at FCI Terminal Island, a low‑security federal facility near Los Angeles, and has sought a presidential pardon.

The appeals court heard arguments but did not issue an immediate ruling.