A federal appeals court in New York on Tuesday upheld Sam Bankman-Fried‘s conviction on fraud and conspiracy charges that followed the collapse of his crypto exchange, FTX.
In 2024, Bankman-Fried was sentenced to 25 years in prison for orchestrating what prosecutors have called one of the biggest financial frauds in American history.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals decided that Bankman-Fried was the “driving force” behind a fraud that misappropriated billions of dollars from customers and investors.
Former FTX chief Sam Bankman-Fried leaves the Federal Courthouse following a bail hearing ahead of his October trial, in New York City on July 26, 2023.
Angela Weiss/AFP via Getty Images
Bankman-Fried secured investments in FTX by promising customers their funds would be secure and used only for cryptocurrency transactions on FTX. Instead, Bankman-Fried freely transferred investor funds to a hedge fund he controlled, Alameda, and used those funds for purposes investors had not authorized, including for his own personal benefit, officials said.
Bankman-Fried argued on appeal that the trial judge wrongly precluded him from introducing evidence that, despite his many unauthorized transactions, his investments were sound and over time investors would be made whole.
The appellate court said that line of defense has been rejected by the U.S. Supreme Court, which has said that fraud occurs when a defendant uses a material misstatement to trick a victim into forking over money, regardless of whether he intended to cause the victim to lose money.
“To secure Bankman-Fried’s fraud conviction, the government did not need to prove intent to cause economic loss,” the opinion said. “As the district court made clear, FTX customers were defrauded as soon as Bankman-Fried transferred their money to [his cryptocurrency trading firm] Alameda regardless of how strongly he believed he might later return the money.”
