Unanimous Ruling Affirms 25-Year Sentence
Sam Bankman-Fried, the former CEO and co-founder of FTX, has lost his bid to overturn his conviction on fraud and conspiracy charges. On June 12, a three-judge panel from the Second U.S.
The panel’s decision comes more than a year after FTX’s dramatic collapse in November 2022, which exposed an $8 billion shortfall and led to one of the highest-profile criminal trials in crypto history. In their ruling, the judges emphasized that Bankman-Fried’s use of customer funds for personal expenses—including real estate purchases and political donations—was at the heart of the fraud.
Attorney Alexandra Shapiro represented Bankman-Fried during the appeal before the Second Circuit panel in Manhattan.
Judges Dismiss Claims of Unfair Trial
Bankman-Fried’s attorneys argued that his trial, overseen by Judge Lewis Kaplan, was fundamentally unfair. They claimed Kaplan wrongly barred evidence suggesting FTX held enough assets to cover customer withdrawals. However, the appellate panel found no errors in how Judge Kaplan handled objections or evidence rulings. According to bitcoinmagazine.com, prosecutors successfully argued—and the appeals court agreed—that fraud charges depend on misappropriation of funds, not on whether assets might have covered liabilities at some point.
On paper, FTX’s asset values may have fluctuated, but this had no bearing on whether Bankman-Fried committed fraud.
The court also cited a Supreme Court precedent defining fraud as obtaining money through material misstatements or omissions. The existence of unauthorized transactions and falsified business records was not disputed by Bankman-Fried during either the trial or appeal process.
Margin Trading Excuse Fails in Court
One of the more novel defenses raised by Bankman-Fried’s legal team centered on FTX customers’ participation in margin trading—a practice where users borrow funds to increase their trading position. The defense argued that this activity somehow justified the movement and use of customer deposits. The appeals panel rejected this reasoning outright, stating that participation in margin trading did not authorize or excuse the misappropriation of billions in user funds for unrelated purposes such as political contributions or investments through Alameda Research.
The court further clarified that whether assets purchased with customer money later appreciated was irrelevant to determining guilt. This distinction proved critical: even if some investments made with misused funds gained value after the fact, it did not absolve Bankman-Fried of responsibility for taking those funds without permission.
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Presidential Pardon Request Now Pending
With all appellate options now exhausted, Bankman-Fried has turned to an extraordinary measure: seeking a presidential pardon. His formal application appeared on the U.S. Department of Justice Office of the Pardon Attorney website in early June 2024. In a Fox Business interview, he confirmed he is directly appealing to former President Donald Trump for clemency—a move that echoes recent high-profile pardon requests from other convicted figures in crypto history.
So far, Trump has publicly stated he does not intend to grant Bankman-Fried a pardon, despite having pardoned Ross Ulbricht—the Silk Road founder—in January 2025 after Ulbricht served two life sentences plus forty years. The outcome for Bankman-Fried remains uncertain; his $11 billion forfeiture order and three years of supervised release following his sentence still stand as legal consequences.
Caroline Ellison, Gary Wang, and Nishad Singh—three former deputies who pleaded guilty and testified against him—remain key figures whose cooperation helped secure the conviction last November.
Signals yet to emerge
If Sam Bankman-Fried’s clemency petition, filed with the DOJ’s Office of the Pardon Attorney in early June, is granted by US President Donald Trump despite Trump’s January statement that he had no plans to pardon him, it would immediately overturn Bankman-Fried’s 25-year prison sentence; as of now, the outcome of this pardon request remains unclear.
