Bankman-Fried loses appeal of FTX fraud conviction

Sam Bankman-Fried lost his bid Friday to overturn his fraud conviction and 25-year prison sentence, leaving intact the judgment against the FTX founder over the collapse of the cryptocurrency exchange that prosecutors called a “fraud of epic proportions.”

A unanimous three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan rejected Bankman-Fried’s challenge to his 2023 conviction on seven felony charges. The former crypto billionaire had argued that the trial judge wrongly limited evidence he said would have supported his belief that FTX had enough money to cover customer withdrawals.

The appeals court disagreed. Circuit Judge Barrington Parker, writing for the panel, said the government’s case “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,” Parker wrote.

Bankman-Fried, once one of the cryptocurrency industry’s most prominent figures and a multibillionaire, was convicted by a federal jury in Manhattan after FTX’s collapse in 2022. Prosecutors with the Manhattan U.S. attorney’s office said he stole $8 billion from FTX customers and used the money to cover losses at Alameda Research, his crypto-focused hedge fund.

He had pleaded not guilty to two counts of fraud and five counts of conspiracy. At trial, Bankman-Fried admitted he made mistakes while running FTX but testified that he never stole customer funds.

His lawyers argued on appeal that U.S. District Judge Lewis Kaplan, who oversaw the trial, improperly barred evidence related to Bankman-Fried’s claim that he believed FTX could make customers whole. The appellate panel cited legal precedent holding that fraud occurs when someone is tricked into handing over money or property, regardless of whether the defendant intends to repay it later.

“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.

Prosecutors said the trial evidence overwhelmingly proved Bankman-Fried’s guilt. Three former Bankman-Fried deputies pleaded guilty, cooperated with the government and testified that he directed them to use FTX customer funds to plug losses at Alameda.

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

Bankman-Fried’s lawyers did not immediately respond to a request for comment, Al Jazeera reported. They may ask all active judges on the 2nd Circuit to rehear the case or ask the U.S. Supreme Court to review it.

Bankman-Fried is also seeking a pardon from U.S. President Donald Trump, according to the Justice Department’s Office of the Pardon Attorney. Al Jazeera reported that neither the White House nor the Justice Department immediately responded to requests for comment.

Bankman-Fried is being held at a low-security federal prison near Santa Barbara, California. If his sentence remains in place, he is eligible for release in 2044.