Crypto Law Brief: Bankman-Fried Petitions the Supreme Court, ESMA Says Polymarket Isn't Authorized, and Bitwise Kills Its Dogecoin ETF

The past two days put crypto in front of judges, regulators, and legislators at once: a certiorari petition from FTX's founder, a European warning to prediction markets, a rewritten market structure bill facing a floor test Tuesday, and a meme-coin ETF winding down.

Bankman-Fried Asks the Supreme Court to Undo an $11 Billion Forfeiture

Sam Bankman-Fried filed a petition for certiorari on September 10, asking the justices to vacate his seven fraud, conspiracy, and money laundering convictions and strike the $11 billion forfeiture entered against him. He is serving a 25-year sentence. The petition raises two questions: that the trial court admitted proof of customer losses while barring the defense from showing FTX creditors were later repaid with interest, and that the forfeiture is an excessive fine under the Eighth Amendment.

The repayment argument faces a steep climb, since the Second Circuit affirmed in June on the strength of Kousisis v. United States, the Supreme Court's 2025 holding that wire fraud requires no proof of intended net economic harm. The forfeiture question matters more to practitioners, because forfeiture in these cases is routinely computed on gross proceeds moving through an account rather than on what a defendant kept.

ESMA Says Polymarket and Kalshi Are Not Authorized in the EU

The European Securities and Markets Authority said Thursday that the two largest prediction platforms lack authorization to offer event contracts in the bloc. Event contracts can qualify as financial instruments under MiFID II, and depending on structure may also implicate the EU's binary-options restrictions, MiCA, or national gambling law.

No fine was announced and no case opened; this is a notice of position, which is how European supervisors signal to 27 national authorities that they may act on their own. ESMA asked why the platforms' geo-blocks cover only some member states and how well they survive VPN use, a hard question for any venue whose EU compliance story is geo-blocking.

The Clarity Act Gets a 630-Page Rewrite Before Tuesday's Vote

Senators led by Cynthia Lummis circulated a revised 630-page Digital Asset Market Clarity Act on September 10, ahead of a first procedural vote on September 15 — cloture on the motion to proceed, not passage. Lummis said the draft incorporates more than 114 provisions requested by Senate Democrats.

The rewrite creates a registration path for what the text calls non-decentralized finance protocols, which would register with the CFTC. That category converts decentralization from a marketing claim into a factual question a protocol may have to prove: who holds upgrade keys, who runs the front end, who can pause a contract.

Bitwise Winds Down Its Dogecoin ETF

Bitwise filed an 8-K on September 10 liquidating the Bitwise Dogecoin ETF, ticker BWOW, about ten months after launch. The last NYSE trading day is expected to be October 14, net asset value is struck October 21, and cash goes out October 22. The fund held roughly $722,000 and had seen about $1.2 million in net outflows since its November 2025 debut.

Nothing improper happened; the prospectus permits it. But a liquidation is a sale on a date the shareholder did not pick, with no in-kind option to roll the exposure — a taxable event for anyone holding BWOW outside a retirement account.

What This Means for You

If you hold a thinly traded crypto ETP, check its assets and flow history rather than assuming a listed product stays listed. If you trade event contracts from inside the EU, a platform's willingness to take your order is not evidence it is licensed to take it. If you are building a protocol, document your governance and key-control facts now.

The throughline is that self-classification is losing value. ESMA wants platforms to justify the jurisdictions they chose to block, the Senate draft would give decentralization a defined meaning, and the Bankman-Fried petition shows that repaying creditors later does not change what a court finds a defendant intended.

At Coin Counsel, we work with individuals and businesses navigating the legal fallout of crypto fraud — whether you're a victim seeking recovery, a company facing regulatory scrutiny, or a project working to stay compliant in an increasingly complex legal landscape. The rules are evolving fast, and the cost of getting it wrong has never been higher. Contact us at coin-counsel.com to speak with a crypto-focused attorney today.

Disclaimer

This blog post is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Coin Counsel or Franco Law PLLC. The legal landscape surrounding cryptocurrency is rapidly evolving and varies by jurisdiction. Do not act or refrain from acting based on information in this post without first consulting a qualified attorney. If you believe you have been the victim of crypto fraud, contact us at coin-counsel.com for a consultation.