Sam Bankman-Fried loses appeal to overturn fraud convictions and prison

Former crypto tycoon Sam Bankman-Fried has lost his bid to overturn his fraud conviction and 25-year prison sentence over the collapse of the FTX cryptocurrency exchange he founded.

In a unanimous decision on Friday, a three-judge panel of the Manhattan-based 2nd United States Circuit Court of Appeals said prosecutors’ evidence against Bankman-Fried “was, conservatively stated, robust”.

“While he was publicly reassuring customers, investors and regulators that FTX customer funds were safe, he was simultaneously using FTX as his own personal piggy bank, spending customer funds on real estate, political contributions, and investments,” Circuit Judge Barrington Parker wrote on behalf of the panel.

Bankman-Fried’s lawyers did not immediately respond to a request for comment. They may next ask all the active judges on the 2nd Circuit to hear the case, or ask the US Supreme Court to take up the case.

Bankman-Fried is also seeking a pardon from US President Donald Trump, according to the Department of Justice’s Office of the Pardon Attorney. Neither the White House nor the Justice Department immediately responded to requests for comment.

While it is not clear if that would happen, Trump, last year, did pardon another crypto tycoon, Changpeng Zhao, founder of the giant Binance cryptocurrency exchange, who was convicted of violating US money-laundering laws.

‘Fraud of epic proportions’

Bankman-Fried, who had been one of the cryptocurrency sector’s most influential figures and a multibillionaire before FTX’s spectacular collapse in 2022, 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 $8bn from FTX customers to plug losses at his crypto-focused hedge fund, Alameda Research, in what they termed a “fraud of epic proportions”.

Bankman-Fried had pleaded not guilty to the two counts of fraud and five counts of conspiracy that he faced. At his trial, he admitted to making mistakes running FTX, but testified that he never stole funds.

In appealing the conviction, Bankman-Fried’s defence lawyers argued that US District Judge Lewis Kaplan, who oversaw the trial, improperly prevented Bankman-Fried from introducing evidence to back up his belief that FTX had enough funds to cover customer withdrawals.

The appeals court disagreed, pointing to legal precedent holding that fraud occurs the moment a defendant tricks someone into handing over money or property, even if the defendant intends to eventually make the victim whole.

“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,” Parker wrote.

Eligible for release in 2044

Before FTX collapsed, Bankman-Fried was a rising star in the rough-and-tumble crypto industry who burnished his reputation with lavish philanthropic and political donations.

At his March 2024 sentencing hearing, Kaplan said Bankman-Fried knew his actions were wrong but “made a very bad bet about the likelihood of getting caught”.

Three of Bankman-Fried’s former deputies pleaded guilty over their involvement in the case and testified against their onetime boss at his trial.

Bankman-Fried is being held at a low-security federal prison near Santa Barbara, California. He is eligible for release in 2044.