Updated

Updated · Financial Times · Jun 12

Appeals Panel Upholds Bankman-Fried’s 25-Year FTX Fraud Sentence and $11 Billion Repayment Order

Updated

Updated · Financial Times · Jun 12

Appeals Panel Upholds Bankman-Fried’s 25-Year FTX Fraud Sentence and $11 Billion Repayment Order

Q: If FTX is repaying customers in full, what was the real crime Sam Bankman-Fried was convicted of?

Sam Bankman-Fried’s crime was not simply that FTX later failed to repay customers; it was that he fraudulently took and used customer money without permission. At trial, prosecutors proved that FTX customer deposits were diverted to Alameda Research, his hedge fund, to cover trading losses, repay lenders, and fund investments, political donations, and other spending. A jury convicted him on seven felony counts, including wire fraud and conspiracy, because he misrepresented how customer assets would be handled and concealed the true financial condition of FTX and Alameda. The later fact that the bankruptcy estate recovered enough assets to repay many customers does not erase that conduct. Criminal fraud is judged at the time the money was taken and misused, not by whether a bankruptcy team later clawed back assets or benefited from rising crypto prices. When FTX collapsed in 2022, it faced an roughly $8 billion shortfall and could not meet withdrawal demands. That distinction is central to the courts’ rulings. Bankman-Fried argued that FTX may ultimately have had enough value to cover customers, but judges rejected that defense. The evidence showed unauthorized transfers of customer funds and deliberate deception, not a mere liquidity mismatch or bad management. So the “real crime” was misappropriation and fraud: using customer deposits as a secret financing source for Alameda and misleading customers, investors, and lenders about it.

3 articles · Updated · Financial Times · Jun 12

A three-judge appeals panel left Sam Bankman-Fried’s 2023 conviction intact on seven fraud and money-laundering counts, along with his 25-year prison term.
Judges rejected his claim that flawed jury instructions denied him a fair trial, saying he did not meaningfully challenge the government’s evidence and that FTX customers were harmed by deceptive transfers to Alameda.
The ruling also preserves the $11 billion repayment order tied to prosecutors’ case that he misappropriated billions in customer funds for risky investments, personal spending and political donations.
Bankman-Fried, who has served nearly three years, can still seek review from the full appeals court or the US Supreme Court as he separately pursues a pardon from President Donald Trump.
The decision extends the fallout from FTX’s 2022 collapse, a defining crypto-industry failure that toppled a founder once valued by Forbes at $22.5 billion before age 30.

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If FTX is repaying customers in full, what was the real crime Sam Bankman-Fried was convicted of?

Beyond more laws, what is the key to preventing the next multi-billion dollar crypto fraud?

SBF’s 25-Year Conviction Upheld: $11 Billion FTX Fraud Spurs Regulatory Overhaul and Customer Payouts

Overview

On June 12, 2026, the U.S. Court of Appeals for the Second Circuit upheld Sam Bankman-Fried’s conviction, reinforcing legal oversight in the cryptocurrency sector. This decision boosts investor confidence in the digital asset legal framework and reminds all market participants of the importance of compliance and strong governance. Prosecutors argued that Bankman-Fried’s trial was fair, addressing concerns about a preview hearing and suggesting it could have even benefited him. The ruling sends a clear message that even complex financial fraud in crypto will face strict legal scrutiny, shaping the industry’s future toward greater accountability and transparency.

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