Three-Judge Panel Upholds Conviction
Sam Bankman-Fried lost his bid to overturn his fraud conviction on Friday when a three-judge panel of the second US circuit court of appeals rejected his appeal. The Manhattan-based court upheld his 25-year prison sentence in a unanimous decision. The ruling closes one legal avenue for the former cryptocurrency executive, though his lawyers may pursue additional appeals or seek intervention from higher courts.
The Core Fraud Allegations
Bankman-Fried was found guilty on seven felony charges by a federal jury in Manhattan in 2023. Prosecutors with the Manhattan US attorney's office said he stole $8 billion from FTX customers in what they termed a "fraud of epic proportions." At his trial, he admitted to making mistakes running FTX but testified that he never stole funds. Instead, he claimed FTX had enough money to cover customer withdrawals.
Why the Appeal Failed
Bankman-Fried's defense lawyers argued that US district judge Lewis Kaplan improperly prevented him from introducing evidence to support his belief that FTX possessed sufficient funds. The appeals court disagreed. Circuit Judge Barrington Parker wrote that the prosecutors' evidence "was, conservatively stated, robust" and that fraud occurs the moment a defendant tricks someone into handing over money, even if the defendant intends to eventually repay it. Parker noted that "FTX customers were defrauded as soon as Bankman-Fried transferred their money to Alameda regardless of how strongly he believed he might later return the money."
How the Fraud Operated
Three of Bankman-Fried's former deputies pleaded guilty and testified against him at trial. They described how he directed them to raid FTX customer funds to plug losses at Alameda Research, his crypto-focused hedge fund. Parker wrote that while Bankman-Fried was publicly reassuring customers, investors and regulators that FTX funds were safe, "he was simultaneously using FTX as his own personal piggy bank, spending customer funds on real estate, political contributions, and investments."
At his March 2024 sentencing hearing, Judge Kaplan said Bankman-Fried knew his actions were wrong but "made a very bad bet about the likelihood of getting caught."
What Comes Next
Bankman-Fried's lawyers may ask all active judges on the second circuit to hear the case or petition the US Supreme Court. He is also seeking a pardon from President Donald Trump, according to the Department of Justice's Office of the Pardon Attorney.
Bankman-Fried is being held at a low-security federal prison near Santa Barbara, California. If he exhausts all remaining legal avenues without success, he is eligible for release in 2044.
