Sam Bankman-Fried Loses Appeal of Conviction for FTX Fraud (1)

FTX co-founder Sam Bankman-Fried lost his bid to overturn his fraud conviction and 25-year prison sentence, with a federal appeals court rejecting his claims of not receiving a fair trial.

A three-judge panel on Friday unanimously declined to throw out a 2023 guilty verdict that the onetime cryptocurrency mogul argued was tainted by improper evidentiary rulings and a biased judge.

The ruling was not unexpected, as the panel expressed skepticism of Bankman-Fried’s claims during oral arguments before the US Second Circuit Court of Appeals in November. Bankman-Fried may try to appeal to the Circuit’s full panel of judges or to the US Supreme Court. He has also applied and lobbied for a pardon from President Donald Trump.

Bankman-Fried was convicted of siphoning billions of dollars from FTX customer accounts and transferring it to his affiliated hedge fund, Alameda Research. Alameda used the money for speculative investments, political donations and expensive real estate, racking up billions of dollars in liabilities in the process. Both FTX and Alameda collapsed after digital assets plunged in value in 2022.

Alexandra Shapiro, Bankman-Fried’s appeals lawyer, contended that US District Judge Lewis Kaplan, who oversaw the trial, wrongly blocked the defense from telling jurors that there was plenty of money to repay FTX customers, despite the exchange’s bankruptcy.

The appeals court said even a temporary misappropriation of funds violated the fraud statute. “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,” US Circuit Judge Barrington Parker wrote for the panel.

Shapiro had argued that the defense was “cut off at the knees” by Kaplan’s ruling barring Bankman-Fried from arguing that he relied on lawyers’ advice for some of the actions he took as FTX’s chief executive officer.

But the appeals court concluded Bankman-Fried “was able to present his version of events to the jury when he testified to his good faith belief that Alameda’s assets were greater than its liabilities.”

In court filings, Bankman-Fried’s lawyers accused Kaplan of “repeatedly putting a thumb on the scale to help the government and thwart the defense.” They claimed the judge “continually ridiculed” their client and pressured jurors into a quick verdict on the first day of deliberations, offering free dinner and a car service home if they wished to stay late.

Prosecution witnesses against Bankman-Fried included his sometime girlfriend Caroline Ellison, who was Alameda’s CEO; his Massachusetts Institute of Technology roommate and FTX co-founder Gary Wang and FTX engineering chief Nishad Singh. All three pleaded guilty to fraud, but Wang and Singh avoided prison, while Kaplan sentenced Ellison to two years behind bars.

Bankman-Fried testified in his own defense, saying that he never intended to defraud anyone. But the jury found him guilty after deliberating for less than five hours.

He is serving his sentence in a low-security federal prison near Los Angeles.

(Updates with detail from ruling, background)

--With assistance from Chris Dolmetsch.

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