On Friday, June 12, Reuters reported that Sam Bankman-Fried lost his appeal after a three-judge panel of the U.S. Court of Appeals for the Second Circuit in Manhattan declined to overturn his conviction in connection with the collapse of the cryptocurrency exchange FTX. The ruling upholds the outcome of the 2023 trial, in which a federal jury found Bankman-Fried guilty on all seven counts.
Basis of the Appeal
Bankman-Fried’s lawyers centered their appeal on the actions of Judge Lewis Kaplan, who presided over the trial. According to the defense, the judge improperly prevented the defendant from presenting evidence that FTX had sufficient funds to cover customer withdrawals. This was the same position Bankman-Fried maintained during the trial, where he acknowledged management mistakes but denied stealing customer funds.
Prosecutors rejected that argument, pointing to testimony from three of the founder’s former executives. The former executives pleaded guilty, cooperated with prosecutors, and testified that, at Bankman-Fried’s direction, customer funds from FTX were used to cover losses at the hedge fund Alameda Research.
Background of the Case Against Bankman-Fried
The case centered on seven criminal charges: two counts of fraud and five counts of conspiracy. Prosecutors estimated that $8 B had been taken from customers and described the scheme as fraud on a grand scale. During sentencing in March 2024, Kaplan said that the defendant understood his actions were unlawful but misjudged the likelihood of being caught.
Before FTX collapsed in 2022, Bankman-Fried was one of the most influential figures in the cryptocurrency industry and a multibillionaire. He bolstered his public image through charitable giving and political donations. He is now being held in a federal prison near Santa Barbara, California, and will not be eligible for release until 2044.